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Buying a home

Compare options: wait and save or go with low deposit

Roisin Broderick, Content Specialist, Keystart

01 May 2019 • 3 min

If you are considering getting into your own home, you have probably been giving some thought about the right time to buy. Getting your own home and taking on the responsibility of a home loan is a big step and one which requires careful planning. Your timing will be affected by the market as well as your reasons for buying, your budget and your savings.

You need to find the right balance of your requirements and what options are available to you.

You have your reasons to get moving

Weighing up the pros and cons of when to buy a home will depend on your personal situation. If you are living with parents, you may be able to take your time. If you are renting, you will need to consider if you would rather be paying a mortgage than paying rent. Perhaps you have a growing family and need more space than your home currently offers.

Deposit ready?

The amount of deposit required by lenders will vary, dependent on the lender’s loan products, your situation and how much you need to borrow.  

Keystart’s low deposit means our customers can get into their own home sooner. With a Keystart home loan deposit starting as low as 2%, it may not take you very long to save the required amount.

In the reverse scenario, waiting to save a larger deposit represents a trade-off in the time spent renting rather than living in your own home, but may open more options in terms of a range of lenders.

The trade off with interest rates

Keystart’s vision is to make the dream of affordable home ownership a reality for more people. Our low deposit home loans can get you into your own home sooner. In order for Keystart to offer low deposit home loans, we have an interest rate policy that enables us to manage our lending risk responsibly.

When researching interest rates with other lenders you may find there is a requirement for a higher deposit (5 or 10%) before you would be eligible for a loan with that lender. It’s important to investigate the loan conditions carefully, as advertised interest rates are only one part of the story.

View our interest rates here 

Lender’s mortgage insurance option

Another option to access a home loan with a low deposit could be to go with a lender who charges lender’s mortgage insurance (LMI). This allows borrowers to access loans with perhaps a 5% or 10% deposit. The LMI protects the lender (not the borrower) but is paid for by the borrower, and can amount to a significant cost. Read more about lender’s mortgage insurance.

Keystart does not charge LMI on our home loans.

Compare: Let’s look at an example

Julia and Tony are a single income family with two children aged 4 and 6 and would like to stop renting. They want a home of their own for their family. Their annual combined income is $105,000. They are looking at a home for around $430,000 purchase price. They have no other debts and minimum household expenses.


Saving for Keystart’s 2% deposit

Saving for a 10% deposit with another lender

Saving for a 20% deposit with another lender

Annual income before tax$105,000$105,000$105,000
Annual income after tax$80,408$80,408$80,408
Keystart minimum benchmark living expenses for a family with two children*
$3,479 per month$3,479 per month$3,479 per month
Weekly rent*$340$340$340
Remaining income$20,980$20,980$20,980
Purchase price$430,000$430,000$430,000
Minimum deposit required$8,600$43,000$86,000
Time to save4 months2 years4 years 1 month

* Other lenders may use different calculations of household expenses. Keystart always uses the higher of actual expenses and the comparative benchmark.

Keystart aims to help more people into affordable home ownership. Our low deposit home loans may make that dream a reality sooner. 

Keystart recommends that you seek your own independent financial advice prior to making any decisions about your financial needs. Any examples given in this post are provided for illustrative purposes only.