Saving for a home loan

What is a good deposit on a house? The simple answer is as much as you can possibly get together. The larger the deposit you have, the smaller the loan you’ll need, the easier the approval process will be and the better the interest rate and loan terms you’ll be able to negotiate.

The minimum home loan deposit normally required is 10%, but you should try and get at least 20% together if you can. That’s because if you borrow more than 80% of a property’s value, your lender may require you to take out Lenders’ Mortgage Insurance.

It’s also worth checking if you’re eligible for any grants or government schemes (like the First Home Owner Grant), as they can help to bolster your deposit amount.
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No one said saving for a home was going to be easy.

As well as the biggest deposit you can possibly manage (at least 10% and preferably 20%), there are a number of other upfront expenses you’ll have to save for when buying your home. These include;

Stamp duty – ranges from zero up to many thousands of dollars, depending on where you are. If you’re a first home buyer, you may be entitled to an exemption, so check the government website in your state or territory.
Transfer fee - a state government fee for property title transfers which also varies by state. It could be hundreds or thousands of dollars, so check your government website for details.
Mortgage registration fee – another government fee covering mortgage registrations, but usually only in the low hundreds, depending on which state you’re in.
Legal fees - covers the cost of a licensed conveyancer reviewing your contract and title and drafting the settlement documents. This can cost anywhere from a few hundred to a few thousand, depending on complexity.
Mortgage application fee – a fee charged by your bank to set up your mortgage. Some banks offer reduced-fee deals, so shop around.
Lenders Mortgage Insurance – usually only required if your deposit is less than 20%, it can cost you between 1 and 3% of the loan amount.
Inspection fee – you’ll need a building inspection to check for termites and structural issues. This could set you back anywhere from $200 to $500.
Other costs - building insurance costs around $1000 a year for home insurance and $500 for contents, utility connections can be in the hundreds of dollars and removalist fees can be anywhere from $500 to $3,500.

Altogether, you could be looking at $30,000 on top of your deposit, so make sure you budget these amounts into your savings plan so you don’t have any nasty surprises come settlement time.

If you’d like a more detailed breakdown of the costs, take a look at our 'What it costs upfront to buy a home' Home Loan Guide below.

You can get more info about the fees associated with a Tic:Toc home loan here.
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If you’re a first home buyer, the answer is probably yes.

The amount and eligibility criteria for the First Home Owner Grant varies, but here is a summary of what each state currently offers;

NSW – a $10,000 grant for buying or building a new home valued up to $600,000 or $750,000 for house and land.
Victoria – a grant for buying or building a new home valued up to $750,000. The grant is $10,000 in metropolitan Melbourne and $20,000 in regional Victoria.
Queensland – a $15,000 grant to buy or build a new home valued up to $750,000.
ACT - a $7,000 grant toward the purchase of a new or substantially renovated home valued up to $750,000.
WA – a $10,000 grant for buying or building a new home valued up to $750,000 (south of the 26th parallel) or $1 million (north of the 26th parallel).
SA – a $15,000 grant for buying or building a new home valued up to $575,000.
Tasmania – a $20,000 grant for buying or building a new home (will reduce to $10,000 from July 1st 2020).
NT - a $10,000 grant for buying or building a new home of any value.

To see the eligibility criteria for your state or territory, visit the government website.
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Equity is the difference between your home's market value and the amount you still owe on your home loan.

You can borrow against this equity to buy an investment property, do renovations or for any other purpose.

Two popular ways to access your home’s equity are by refinancing or by taking out an equity loan.

Refinancing

This involves replacing your existing home loan with a new one, ideally with better terms and conditions and a lower interest rate. Because it involves just one loan with ongoing repayments, it can be easier to manage than an equity loan.

Equity loan

An equity loan is a separate loan you take out in addition to your home loan. It’s often a line of credit which gives you approval to borrow up to a certain amount. You can then choose how much of this you borrow and you only pay interest on what you use.
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You bet you can. Equity is a powerful tool that can set you on the road to building a profitable investment property portfolio.

You can use the equity in your home as an investment property deposit and if you have enough equity built up, you can borrow 80% of the property’s value without having to use your own cash.

How equity is calculated

Your accessible equity is the difference between your home’s current value and how much you still owe on your home loan,

If you’ve lived in your home for five years or more, you’ve probably accumulated quite a bit of accessible equity.

But lenders will only lend up to 80% of your home’s current value minus your current mortgage. This is known as your useable equity, which is quite a bit less than your accessible equity.

But it can still be a significant amount for an investment property deposit or any other use you may have for it, such as renovating your home, investing in shares or managed funds or improving your lifestyle with a holiday or new car.

Tips when buying an investment property

All investments carry some level of risk, so to reduce your exposure when accessing your equity;

You could keep some of your equity for emergencies, instead of using it all to invest in property.
Consider repaying your home loan as quickly as you can.
Think about learning more about property investing so you can make educated choices.
It's always important to get professional financial advice to fully understand your options.
Still have questions about using your equity? Contact our expert team on 08 7109 9010 or send an email to myenquiry@tictochomeloans.com.
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Lenders use it to determine risk when assessing loan applications, so here’s a quick summary of what you need to know about LVR.

What is it?

LVR stands for Loan to Value Ratio. Simply put, it’s a comparison of how much you’re borrowing with how much the property you’re purchasing is worth.

How is it calculated?

LVR is calculated by dividing the loan amount by the purchase price or valuation of the property and multiplying it by 100.

For example, a $240,000 loan to buy a property valued at $300,000 would have an 80% LVR (240,000 divided by 300,000 multiplied by 100).

LVR is important to lenders because the lower the LVR is, the lower the risk is to the lender.

What types of loans does it apply to?

LVR is used by lenders to calculate risk on all sorts of different types of home loans including;

Standard home loan – LVR is calculated by subtracting your deposit from the purchase price and dividing the remainder by the property value.
Refinancing – the lender uses their own valuation of the property to calculate LVR because the price you paid for the property may no longer be relevant.
Off-the-plan – because the value may change by the time the home is built, the lender uses either the purchase price or valuation to calculate LVR, whichever is lower.
Favourable purchase (between family members) – the lender also chooses the lower amount between purchase price and valuation.
Still not crystal clear on LVR? Contact us at Tic:Toc on 08 7109 9010 or email myenquiry@tictochomeloans.com to assess your individual needs.
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Every lender has their own formula for calculating your borrowing power, and they generally look at six main factors.

Deposit - the larger your deposit, the more you can borrow and the less interest you’ll have to pay on your loan.
Income – this is not just how much your household brings in, but how much is left for home loan repayments after the bills and day-to-day expenses are paid.
Level of debt – how much you owe on other loans and credit cards will also influence your available income.
Savings history – having a savings history of at least 3 months demonstrates to a lender that you’ll be able to manage your home loan repayments.
Credit rating – a sound credit rating is one of the first things lenders look at, as it is based on your borrowing and repayment history.
Home loan term – a lender will look more favourably at a longer loan term, but remember it will mean you pay more interest over the life of the loan.
Property value - a lender may conduct a valuation of your chosen property to determine the amount they are willing to lend you.

You can get an upfront estimate of your borrowing power with Tic:Toc by using our borrowing calculator.
In short, no. However, your maximum purchase price may increase with a higher deposit.

When we look at your borrowing power, we take into account your ability to comfortably meet repayment requirements, which is impacted by your income, expenses, other financial commitments and living/family situation (eg de facto, single, dependents or no). All of these factors can impact how much you can borrow. Using things like borrowing calculators is an easy way to get an idea of how much you can borrow.

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You can increase your borrowing power by reducing your financial commitments. Things like closing or reducing the limits of unused credit cards can improve your borrowing power.

Having extra income (like a second job or side hustle), and ensuring you have all your extra income types (like overtime or commission) included when filling out an application/borrowing calculator can also help!

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To calculate loan repayments, at a very basic level, we take your loan amount, add the total estimated amount of interest we’ll charge over the life of the loan, and then divide that total up into a weekly, fortnightly, or monthly amount (whichever suits you best) based on the length of your loan term.

How we calculate weekly and fortnight repayments

We calculate weekly and fortnightly repayments a little differently. For example, in a fortnightly repayment scenario, instead of multiplying the monthly repayment by 12 and dividing it by 26 fortnights, we simply divide your monthly repayment amount by 2.

The fortnightly repayment amount is rounded up to the nearest dollar. This calculation method ensures you pay the full monthly figure over 2 fortnights. Over time, this means you'll pay off your loan slightly faster and pay less interest than if the repayments were calculated by annualising the monthly figure.

For fixed and interest-only loans

If you’re taking out a fixed or interest-only loan — or a fixed interest-only loan — we’ll also take that into account, as your repayments will change when the fixed and/or interest-only period ends.
The First Home Owner Grant is a national first home buyer scheme designed to help Australians with buying their first property. Each state and territory have their own criteria to be eligible, but in general to be eligible you’ll need to be over the age of 18, a permanent resident or Australian citizen, and you can’t have previously owned a residential property anywhere in Australia.

State-by-state breakdown (last updated April 2022)

South Australia

Up to $15,000 for eligible first home buyers
Available for new properties up to the value of $575,000
You’ll need to live in the property for 6 months once you have bought it
You must be 18 or over
At least one applicant needs to be a permanent resident or an Australian citizen
No applicant can be a company or trust
You can’t have owned a home prior to 1st July 2000
You can’t have lived in a home that you owned after 1st July 2000 (for six consecutive months or more)

Australian Capital Territory

A grant of up to $7000 was available until 30th June 2019.
The FHOG has been replaced with the Home buyer concession scheme, which eliminates or reduces the amount of stamp duty payable
For 2021-22, the maximum concession amount is $35,910
The concession is available for all properties within the ACT, new and old. This includes land.
All buyers of the property must be at least 18 years old.
The total gross income of the buyers must meet an income threshold to be eligible.
Buyers can not have owned property within the previous 2 years.At least one of the buyers must reside in the property for a minimum period of 12 months.

New South Wales

Up to $10,000 for eligible home buyers
Available for new properties up to the value of $600,000 OR;
When building a home with a total value up to $750,000
Full or partial exemption from paying transfer (stamp) duty for eligible home buyers
You’ll need to live in the property for 6 months once you have bought it
You must be 18 or over
At least one applicant must be a permanent resident or an Australian citizen
No applicant can be a company or trust
You can’t have owned a home prior to 1^st July 2000
You can’t have lived in a home that you owned after 1^st July 2000 (for six consecutive months or more)
You can’t have previously received a grant

Victoria

Up to $10,000 for eligible home buyers
Available for new properties up to the value of $750,000
Land transfer (stamp) duty exemption or concession for eligible home buyers
You’ll need to live in the property for 12 months once you have bought it
You must be 18 or over
At least one applicant must be a permanent resident or an Australian citizen
You can’t have owned a home prior to 1st July 2000
You can’t have lived in a home that you owned after 1st July 2000
You can’t have previously received a grant

Northern Territory

Up to $10,000 for eligible home buyers
Household goods grant of up to $2000
You’ll need to live in the property for 12 months once you have bought it
At least one applicant must be 18 or over
At least one applicant must be a permanent resident or an Australian citizen
No applicant can be a company or trust
You can’t have owned a home prior to 1st July 2000
You can’t have lived in a home that you owned after 1st July 2000
You can’t have previously received a grant

Queensland

Up to $15,000 for eligible home buyer
Available for new properties up to the value of $750,000
Transfer (stamp) duty concession of up to $15,925 of properties valued under $550,000, or a full exemption for properties valued under $500,000
You’ll need to live in the property for 6 months once you have bought it
You must be 18 or over
At least one applicant needs to be a permanent resident or an Australian citizen
You can’t have lived in any home that you have owned
You can’t have already received a grant

Western Australia

Up to $10,000 for eligible home buyers
Available for new properties (located south of the 26th parallel of south latitude — which includes the Perth metro area) up to the value of $750,000
Available for new properties (located north of the 26th parallel of south latitude) up to the value of $1,000,000
Transfer (stamp) duty exemption or concession for eligible home buyers
You’ll need to live in the property for 6 months once you have bought it
You must be 18 or over
At least one applicant needs to be a permanent resident or an Australian citizen
No applicant can be a company or trust
You can’t have owned a home prior to 1st July 2000
You can’t have lived in a home that you owned after 1st July 2000 (for 6 consecutive months or more after the 1st July 2004)
You can’t have previously received a grant

Tasmania

Up to $30,000 for eligible home buyers (until 30th June 2023)
Available for new properties only
Transfer duty concession of up to 50% for first home buyers purchasing an existing property up to a value of $600,000 (until 30 June 2023)
No purchase price limit
You’ll need to live in the property 6 months once you have bought it
You must be 18 or over
You must be a permanent resident or an Australian citizen
No applicant can be a company or trust
You can’t have owned a home before 1st July 2000
You can’t have lived in a home that you have owned after 1st July 2000 (for 6 consecutive months or more)
You can’t have previously received a grant

Saving for a home loan

How much deposit do I need for a home loan?

What are the upfront costs involved in buying a home?

Can I get a First Home Owner Grant from the government?

What is equity?

Can I use the equity in my current home as a deposit?

What does LVR mean?

How much can I borrow against my salary?

Can you borrow more money with a bigger deposit?

How can I increase my borrowing power?

How do you calculate home loan repayments?

Will making extra loan repayments help pay off the loan earlier?

What is the First Home Owner Grant?