Brighter Buying

Should I save a 20% deposit?

by Kate Watt, Marketing Manager 13 April 2022

Gone are the days where you need to save a 20 per cent deposit to buy a house.

If you look like a good borrower, you’ll find a lot of lenders will be happy to give you a loan for up to 95 per cent of your property purchase price.

So why does everyone keep banging on about the 20 per cent deposit?

Well, there are pros and cons to saving a large or small deposit.

You should get some independent financial advice to make a decision that is right for you.

Here are a few things to consider.

Buying with a 5% deposit


  • You can buy a home sooner
  • If you qualify for a government guarantee scheme you can avoid paying pricey lenders mortgage insurance which usually applies when you borrow more than 80 per cent of the purchase price.

The down sides

  • You’ll have a bigger loan so your repayments will be higher
  • You may pay a higher interest rate when borrowing more than 80 per cent of the property value
  • You will typically be charged lenders mortgage insurance unless you qualify for a government guarantee

Buying with a 20% deposit


  • You will have a smaller loan, so that means smaller loan repayments
  • You may be able to find a cheaper interest rate when borrowing 80 per cent or less.

The down sides

  • It will take you longer to save a deposit
  • In a hot property market, property price growth might outpace your savings, making it harder to break into the market.

Thinking of buying? Contact us for a chat and view our current listings for sale.