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Effie  B.
Effie B.
Drummoyne, NSW

How much of a deposit do I need for a home loan in Sydney for a property around 650k to 700k?

6 years ago


Hi Effie,

Great question.

My first question to assist with building the most suitable structure is whether the purchase is for investment or to live in? I will assume that it is a principal place of residence.

There is another aspect to discuss and this is whether you can avoid paying lenders mortgage insurance (LMI) or not? I will assume you can i.e. you are looking at a loan with 80% loan to value ratio.

Based on these assumptions for a $650,000 place you will need approx. $106,000 to cover your 20% deposit, coveyancing costs, government charges and bank fees.

Again this is not advice as it is not taking your personal circumstance into account but use this as a rough guide.

Happy to discuss further. Hope this helps.

Hi Effie,

Chris is completely correct with his answer.

If you didn't have the 20% plus stamp duty available you can acquire the property with as little as 5% of the purchase price and stamp duty.

Whilst this gets you in with a lower deposit you will have a higher interest that would be required to pay. So you need to weigh up your options, pros and cons based on your specific situation and circumstances.

If you did not have the ideal 20%, then the deposit required would be:

For a $650,000 purchase this would be $57,600
For a $700,000 purchase this would be $62,400 (rounded up to nearest $100

Mortgage Insurance, again as Chris mentioned, will be applicable. If you qualify there are a couple of lenders where you can add the entire lenders mortgage insurance (LMI) to the loan. (This is known as LMI Capitalisation). Other lenders will cover some of the LMI and other lenders you will need to pay for all of the LMI. It is difficult to quote the LMI as it depends on the lender, loan amount, the deposit you have available and if this is an investment or owner occupied purchase.

There are also family guarantee options too if this is unable to be achieved where property guarantees and term deposits can be used as equity to help you get in the market.

All of these options require thorough discussions as they will have different lender policies to consider but once an understanding of your personal situation is discovered you can see what options are best for you.

I hope this helps and more than happy to discuss further with you if you wish.

Have a great evening
Nicole :)


Great answer Nicole, thank you for sharing

Hi Effie,

The absolute minimum for an owner occupied purchase is 5%. Plus you will need to cover Stamp Duty and other expenses. Bear in mind that if the deposit is less than 20%, you will also have to pay lenders mortgage insurance. This can be added to the loan.

Hope this helps. Feel free to message me if you need any further information.

Hi Effie

Great question.

It really depends on your situation. Ideally a 20% deposit ($130-140K) would be great so that you don't have to pay Lenders Mortgage Insurance. That's not to say LMI is a bad thing - in some cases paying LMI is the price first home owners pay to enter the property market, which can be worth paying given the potential capital growth some properties achieve (especially in the Sydney market). Note that some professions are entitled to borrow over 80% without paying LMI.

However, you can technically buy a property with as little as 5% deposit. It all depends on your situation.

Don't forget if you are a first home buyer you are eligible for the $10,000 grant towards a new property under $750k.

I hope this helps.

Kind regards
Jennifer Bachir
Key Finance and Investments

Hi Effie, some great answers already given.. however the deposit amount needed would also be effected by the type of property. Generally the answer is 5% minimum plus costs.. however if it's a restricted postcode/high density, with the wrong lender it could be 30% + costs.

Happy to chat,

Regards Ariel from Mortgage Advice 0433132331

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