Brighter Buying

How to slash your deposit saving time from 4.5 years to 13 months

by Kate Watt, Marketing Manager 1 October 2020

The time it takes for the average Brissie couple to save for their first house has increased by two months from this time last year and is now sitting at 4.5 years.

But first timers using the government’s First Home Loan Deposit Scheme have fast-tracked their saving time to just 13 months.

How does that work?

The Domain First-Home Buyer Report 2020 calculated the time it would take to save a 20% deposit for an entry-level home, based on an average-earning couple aged 25 to 34 years old.

In Brisbane, that’s four years and six months to save a 20% deposit for a house, or three years and three months for a unit.

But many first timers have slashed their wait time thanks to a government scheme which lets you purchase with a smaller deposit – and avoid the penalty of lenders mortgage insurance (LMI).

When you borrow more than 80% of the value of your home from a bank they will charge you LMI which protects the bank if you can’t make your repayments. So you can save a smaller deposit sooner, but you’ll pay for pricey LMI.

However under the First Home Loan Deposit Scheme you can borrow up to 95% of the value of your property and the government essentially goes guarantor – so the banks don’t charge you LMI.

Not surprisingly the scheme has proved very popular and it can now be tricky to secure a spot this financial year.

The Adviser reported this month that all spots offered by the non-major lenders participating in the scheme have been allocated to buyers. But some places may become available again if borrowers withdraw or their place expires before they secure a home.

So talk to your bank or mortgage broker if you haven’t already.

Meanwhile, if you’re committed to saving a full 20%, here’s how long it takes in Australia’s major capital cities.

For house:

  • Sydney, $680,000, 6 years 6 months
  • Melbourne, $600,000, 6 years
  • Brisbane, $450,000, 4 years 6 months

For units:

  • Sydney, $585,000, 5 years 7 months
  • Melbourne, $424,500, 4 years 3 months
  • Brisbane, $328,000, 3 years 3 months

Ready to buy your first home? Contact us for a chat and view our current listings for sale.