How much deposit do I need for the bank?

Craig Sharp:             I might, or I’m wanting to go out and buy myself a 500,000 dollar home, how much have I got to put down?

Terry Christo:             As a very minimum, you’d want to have approximately 8% of the value of that property, so about 40,000 dollars.

Terry Christo:             If I’m going to move into it myself?

Terry Christo:             Correct.

Craig Sharp:             Mm-hmm (affirmative).

Terry Christo:             In a perfect world you’d probably want to have 10% or slightly more than that to save on the cost of mortgage insurance.

Craig Sharp:             Right. I’d like to talk a bit more about that in a minute. What about if I’m buying an investment property? Same thing?

Terry Christo:             No, slightly different because the banks won’t lend as much for investment properties as they will for unoccupied homes. So for an investor they would need 10% of the purchase price plus their cost. A significant cost in Queensland certainly to buy a property is transfer duty. So you know that’s a significant chunk of money. Around 500,000 dollars, the investment stamp duty is approximately 18,000 dollars.

Craig Sharp:             Oh it’s a bit.

Terry Christo:             So it’s substantial. So for an investor wanting to buy a property at 500,000 dollars they’d need 50,000 dollars towards the deposit being 10%, plus probably another 20,000 to cover off the other incidental costs, the main one being transfer duty.

Craig Sharp:             But it’s a lot less if I’m buying the house to live in?

Terry Christo:             About 7,000 dollars less.

Craig Sharp:             Okay.