How long does it take first home buyers to save a deposit in each capital city?

How long does it take first home buyers to save a deposit in each capital city?

First home buyer couples in Sydney might have to wait 10.5 years to save for a house deposit, and 6.17 years for a unit deposit, according to data from Domain.

Domain have released the 2018 First Home Buyers Report, showing the lowest entry price and quickest path to purchase for first home buyers across Australia’s capital cities.

The findings painted a bleak picture for single first home buyers, with their time doubling to break into the property market.

2018 First Home Buyers Report found:

  • “Softer market conditions in most Australian capital cities have presented first home buyers a window to put into place a savings plan and overcome the deposit hurdle.
  • Access to the First Home Super Saver Scheme from July 1 will further support first home buyers to enter the market quicker, with the ability to access funds from personal contributions to put towards a deposit.
  • In Greater Sydney, the average time for first home buyers to save for an entry price property has been flat year-on-year – equating to 6.7 years for a house deposit and 5.8 years for a unit deposit.
  • In Greater Melbourne, price growth is now slowing and the average time to save a deposit for a house is 6 years and for units, it’s 4.2 years.
  • Greater Adelaide and Greater Perth come out on top: home to areas with some of the lowest entry prices and quickest paths to purchase for houses, nationally.
  • For units, Greater Adelaide, Greater Perth and Greater Hobart offer areas with the lowest entry point and the shortest time for first home buyers to save a deposit.” 

How is deposit time calculated?

Deposit saving time is calculated by comparing salary and entry-level price.

“With the average age to purchase a first home being 34, the report is based on the average income for couples between 25-34 years old in each capital city. ABS wage data is used to provide an estimate of current salary by factoring wage price growth using the ABS Wage Price Index (WPI).

The time required to save a deposit is based on a dual income, with each person saving 20 per cent of their post-tax income monthly that is deposited in a standard online savings account (interest earned is taxed at the individuals’ tax rate).”

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Source: Domain.com.au

Domain’s Data Scientist, Dr Nicola Powell, stated that for first time home buyers, “the property market can be daunting.”

“That’s why we’ve released Domain’s First Home Buyers Report. The report aims to make it easier for home hunters to determine the areas that offer the most promise based on locations that offer the quickest path to purchase, budget and proximity to the nearest CBD.

“While there are many factors to consider when making a purchase, the report shows there are options across every capital city,” said Dr Powell.

Greater Sydney

For the Greater Sydney area, Domain’s 2018 First Home Buyers Report found that for houses and units, Wyong on the Central Coast had the lowest entry price and time taken to save a 20 per cent deposit.

HOUSES

  • Lowest = Wyong – entry price of $483,000 and time taken to save a 20 per cent deposit of 4.7 years.
  • Highest = The Hills Shire – entry price of $1,100,00 and time taken to save a 20 per cent deposit of 10.5 years.

UNITS

  • Lowest = Wyong – entry price of $375,000 and time to save a 20 per cent deposit of 3.67 years.
  • Highest = Sutherland Shire – entry price of $643,000 and time taken to save a 20 per cent deposit of 6.17 years.

The report also noted that Greater Sydney has the longest path to purchase, indicative of the soaring housing prices in the area. Further, seven of the top 20 entry prices identified fall below $650,000, meaning they are eligible for transfer duty exemption.

Greater Melbourne

For the Greater Melbourne area, Domain’s 2018 First Home Buyers Report found that Melton had the lowest entry point and time taken to save a 20 per cent deposit for houses, and for units, Greater Dandenong was the lowest for both categories. 

HOUSES

  • Lowest = Melton – entry price of $424,000 and time to save a deposit of 4.33 years.
  • Highest = Moonee Valley – entry price of $815,000 and time to save a deposit of 8.33 years.

UNITS

  • Lowest = Greater Dandenong – entry price of $305,000 and time to save a deposit of 3.17 years.
  • Highest = Yarra Ranges – entry price of $455,000 and time to save a deposit of 4.67years.

The report also noted that Greater Melbourne had experienced the biggest jump in the time taken to save for a house, an impact of the influx of first home buyers increasing demand. Despite this influx, Melbourne figures still remained below that of Sydney.

Greater Brisbane

For the Greater Brisbane area, Domain’s 2018 First Home Buyers Report found that Ipswich  came out on top for lowest entry point and time taken to save a 20 per cent deposit for houses. For units, the Brisbane area of Logan topped the list.

HOUSES

  • Lowest = Ipswich – entry price of $327,000 and time to save a deposit of 3.33 years.
  • Highest = Brisbane – entry price of $537,500 and time to save a deposit of 5.42 years.

UNITS

  • Lowest = Logan – entry price of $229,000 and time to save a deposit of 2.33 years.
  • Highest = Redland – entry price of $385,000 and time to save a deposit of 3.92 years.

The report also noted that the number of first home buyers had increased in Queensland, likely thanks to the First Home Owner’s Grant. Further, in Greater Brisbane the time taken to save a 20 per cent deposit increased by one month from last year, with unit time falling by three months.

Greater Adelaide

For the Greater Adelaide area, Domain’s 2018 First Home Buyers Report found that Playford had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Salisbury had the lowest of each category.

HOUSES

  • Lowest = Playford – entry price of $215,000 and time to save a deposit of 2.25 years.
  • Highest = Adelaide Hills – entry price of $445,000 and time to save a deposit of 4.75 years.

UNITS

  • Lowest = Salisbury – entry price of $200,000 and time to save a deposit of 2.08 years.
  • Highest = Unley – entry price of $298,000 and time to save a deposit of 3.17 years.

The report also noted the entry price for house and units in Greater Adelaide are the lowest of any mainland city. Further, the road to home ownership has “become harder in South Australia, as low wages growth coupled with housing price increases, creates a difficult market to buy in”.

Greater Perth

For the Greater Perth area, Domain’s 2018 First Home Buyers Report found that Kwinana had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Mandurah had the lowest of each category.

HOUSES

  • Lowest = Kwinana – entry price of $268,000 and time to save a deposit of 2.42 years.
  • Highest = Bassendean – entry price of $385,000 and time to save a deposit of 3.50 years.

UNITS

  • Lowest = Mandurah – entry price of $215,000 and time to save a deposit of 1.92 years.
  • Highest = Vincent – entry price of $327,000 and time to save a deposit of 3.00 years.

The report also noted that Greater Perth is the second most accessible capital city for purchasing a home with a relatively low entry price and quick path to purchase. In fact, the state has the highest proportion of entry-level buyers of all the states and territories in Australia.

Greater Hobart

For the Greater Hobart area, Domain’s 2018 First Home Buyers Report found that Brighton had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Glenorchy had the lowest of each category.

HOUSES

  • Lowest = Brighton – entry price of $215,000 and time to save a deposit of 2.42 years.
  • Highest = Hobart – entry price of $570,000 and time to save a deposit of 6.33 years.

UNITS

  • Lowest = Glenorchy – entry price of $195,000 and time to save a deposit of 2.17 years.
  • Highest = Hobart – entry price of $195,000 and time to save a deposit of 3.92 years.

The report also noted that Greater Perth is one of the most accessible capital cities in Australia with the lowest entry price for houses – if you’re looking in the outskirts of the city. Buying a house in Hobart itself would take you 6.3 years to save for.

Canberra

For Canberra, Domain’s 2018 First Home Buyers Report found that Holt had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Curtin had the lowest of each category.

HOUSES

  • Lowest = Holt – entry price of $410,500 and time to save a deposit of 3.67 years.
  • Highest = Kambah – entry price of $475,000 and time to save a deposit of 4.25 years.

UNITS

  • Lowest = Curtin – entry price of $235,000 and time to save a deposit of 2.08 years.
  • Highest = Watson – entry price of $315,000 and time to save a deposit of 2.83 years.

The report also noted that Canberra was “designed as a satellite city with hubs across the territory”, so most of the affordable areas are located on the territory fringe.

Further, although the ACT government abolished stamp duty on new and established homes for first home buyers on an annual household income of $160,000 or less, it’s set to introduce a new policy next year. Domain’s Data Scientist, Dr Nicola Powell, argues that once these new initiatives are in place, an “influx of first home buyers” are expected.

Greater Darwin

For the Greater Darwin area, Domain’s 2018 First Home Buyers Report found that Berrimah had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Nightcliff had the lowest of each category.

HOUSES

  • Lowest = Berrimah – entry price of $281,000 and time to save a deposit of 2.42 years.
  • Highest = Tiwi – entry price of $455,000 and time to save a deposit of 3.92 years.

UNITS

  • Lowest = Nightcliff – entry price of $200,000 and time to save a deposit of 1.75 years.
  • Highest = Larrakeyah – entry price of $440,000 and time to save a deposit of 3.75 years.

The report also noted that the time needed to save for a house or unit in Greater Darwin has fallen over the past year, becoming 11 months quicker to save for an entry price house deposit and nine months quicker to save for an entry price unit deposit.

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Learn more about home loans

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

How do I save for a mortgage when renting?

Saving for a deposit to secure a mortgage when renting is challenging but it can be done with time and patience. If you’re on a single income it can be even more difficult but this shouldn’t discourage you from buying your own home.

To save for a deposit, plan out a monthly budget and put it in a prominent position so it acts as a daily reminder of your ultimate goal. In your budget, set aside an amount of money each week to go into a savings account so you can start building up the ‘0’s’ in your account.  There are a range of online savings accounts that offer reasonable interest, although some will only off you high rates for the first few months so be wary of this.

If you aren’t able to save a large deposit, you can consider ways of entering the market that require small or no deposits. This can include getting a parent to act as guarantor for your home loan or entering the market with an interest only loan.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.

Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How much of a deposit do I need for a home loan from the Commonwealth bank?

The minimum deposit the Commonwealth Bank usually accepts is 10 percent of the amount you wish to borrow. However, a deposit of at least 20 percent of the amount you’re borrowing is needed if you wish to avoid Lenders Mortgage Insurance (LMI). LMI is charged for smaller deposits to give the lender extra recourse if the borrower fails to repay their loan. 

As an alternative to LMI, some borrowers with smaller deposits may opt to pay the Commonwealth Bank’s low deposit premium fee. It is a one-time, non-refundable charge that is added to a low-deposit home loan.

The deposit and the loan amounts are used to determine the LDP -, the higher the deposit, the lower is this cost. 

When calculating how much you need to save, don’t forget to factor in other expenses like stamp duty, insurance, legal fees, and moving costs.

How much deposit will I need to buy a house?

A deposit of 20 per cent or more is ideal as it’s typically the amount a lender sees as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from, with some likely to offer up a lower interest rate as a reward. Additionally, a deposit of over 20 per cent usually eliminates the need for lender’s mortgage insurance (LMI) which can add thousands to the cost of buying your home.

While you can get a loan with as little as 5 per cent deposit, it’s definitely not the most advisable way to enter the home loan market. Banks view people with low deposits as ‘high risk’ and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in LMI as it works on a sliding scale dependent on your deposit size.

Why was Real Time Ratings developed?

Real Time RatingsTM was developed to save people time and money. A home loan is one of the biggest financial decisions you will ever make – and one of the most complicated. Real Time RatingsTM is designed to help you find the right loan. Until now, there has been no place borrowers can benchmark the latest rates and offers when they hit the market. Rates change all the time now and new offers hit the market almost daily, we saw the need for a way to compare these new deals against the rest of the market and make a more informed decision.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.