The benefits of having a larger deposit

Saving a large deposit means smaller interest repayments, no mortgage insurance costs and easier home loan approval.

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You don’t always need a big deposit to take out a home loan, but saving a large deposit before you apply for a mortgage can have a huge range of benefits. These include:

  • Borrowing less. If you can save up a 40% deposit, for example, that’s 40% of the purchase price of a property you can pay off straight away. That means that you borrow less from the bank and pay a whole lot less interest over the life of the loan, which is a big win in anyone’s language.
  • No LMI costs. You’ll most likely need to cover the cost of lenders mortgage insurance if you have less than a 20% deposit saved and need to borrow more than 80% of the purchase price. As a general rule, LMI costs around 2% of the value of the loan. This is an extra expense you’ll need to factor into your calculations when budgeting for a loan, so saving a larger deposit will allow you to avoid this additional cost.
  • Proof of savings. When you apply for a loan, a lender will usually ask for evidence of a regular savings history over three months or more. Known as genuine savings, this usually takes the form of a bank statement showing your regular contributions into a savings account. And if you have a deposit of 30% or more saved, you’ll be able to provide excellent evidence of your savings ability and make your application more attractive in the eyes of a lender.
  • Increase your borrowing power. The more money you have saved, the less risk you represent to a lender. If your bank is confident you’ll be able to comfortably service your loan, your borrowing capacity will increase and you may be able to borrow more.
  • Access special rates and deals. A larger deposit and a lower LVR mean that you may be able to qualify for special loan and interest rate deals that save you even more money. For example, the Mortgage House 50% LVR special is offered to borrowers who have a minimum 50% deposit saved, and it includes flexible features such as the ability to make unlimited extra repayments and a 100% offset account to minimise interest.
  • More choice. Saving a larger deposit also allows you to access a wider range of loans, as more borrowing power gives you access to more of a lender’s products.

Tips to save a larger deposit

  • Develop a savings plan. Developing a realistic savings plan is a great way to start saving for a deposit. Work out how much money you need to save and then work out a budget. Work out how much money you can afford to put away each week and start building your balance.
  • Make regular deposits. Set up a regular direct debit straight from your income into your savings account. This way, you’ll be saving money without realising it, but you can always add in extra lump sums if circumstances allow.
  • Consider a high interest savings account. Shop around for an online savings account that offers a great interest rate and minimal or no fees. You may also want to consider a term deposit so that your savings can earn a higher rate of interest.
  • Cut back on expenses. If you work out a weekly budget, you should be able to find a few areas where you can cut back on expenses. Do you really need that gym membership you never use? Could you eat at home rather than dine out one night extra per week? You’d be surprised how much you can save once you put your mind to it.
  • FHOG. If you’re saving for your first home, remember that states and territories around Australia offer a range of grants and concessions to first-time buyers. The First Home Owners Grant (FHOG) offers useful financial support to many first home buyers, so check to see if you’re eligible.

Check out our full guide to saving a house deposit

Determining your deposit size

The deposit amount you need to get a home loan is determined by each lender and its lending criteria. In the fine print explaining the features of mortgage products, you may have seen the words ‘maximum LVR’ followed by a percentage. LVR stands for loan-to-value ratio, which is a figure that expresses the amount of money you are allowed to borrow on the loan relative to the purchase price of the property.

Many Australian lenders offer loans with a maximum LVR of up to 90% or 95%, which means you would need to have a 10% or 5% deposit saved respectively. However, you would also need to budget for number of other fees that apply when you buy a home, including conveyancing fees, stamp duty and home loan application fees.

For more information about deposit size and what works for you, check out this page on deposit sizes.

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$
years
Name Product Interest Rate (p.a.) Comp. Rate^ Application Fee Ongoing Fees Max LVR Monthly Payment
UBank UHomeLoan Variable Rate
2.34%
2.34%
$0
$0 p.a.
80%
$581.39
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Suncorp Back to Basics Home Loan
2.54%
2.55%
$0
$0 p.a.
80%
$596.91
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.
Macquarie Bank Basic Home Loan
2.49%
2.49%
$0
$0 p.a.
60%
$593.01
A competitive variable rate home loan for owner-occupiers. Requires a 40% deposit.
UBank UHomeLoan Fixed
1.75%
2.22%
$0
$0 p.a.
80%
$537
This very low fixed rate is only available until 26 February 2021. Other conditions apply. A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit
Athena Variable Home  Loan
2.19%
2.19%
$0
$0 p.a.
60%
$569.91
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
Well Home Loans Balanced Fixed Home Loan
1.94%
2.18%
$250
$0 p.a.
90%
$551.07
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.
Suncorp Home Package Plus Fixed
1.89%
2.94%
$0
$0 p.a.
80%
$547.35
Lock in a low fixed rate loan for two years and get the annual package fee waived in the first year. Available for borrowers with 20% deposits.
Well Home Loans Balanced Variable
2.17%
2.2%
$250
$0 p.a.
80%
$568.39
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee. This special discount rate is available for new borrowers who apply and get approved by 30 November 2020. Not available for construction purposes.
Macquarie Bank Offset Home Loan Package
2.49%
2.76%
$0
$0 p.a.
60%
$593.01
A sharp variable rate with low fees for borrowers with 40% deposits or refinancers with equity in their properties.
Virgin Money Reward Me Fixed Rate Home Loan
2.04%
2.79%
$300
$10 monthly ($120 p.a.)
80%
$558.56
$3,000 refinance cashback.
Buy your home and lock in a low rate for the first two years. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 26 February 2021 and settle by 28 May 2021.
Macquarie Bank Basic Fixed Home Loan
2.19%
2.53%
$0
$0 p.a.
80%
$569.91
Borrow up to $750,000 with this basic 3 years fixed rate home loan.
Well Home Loans Balanced Fixed Home Loan
2.04%
2.17%
$250
$0 p.a.
90%
$558.56
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.
HSBC Fixed Rate Home Loan
1.88%
2.98%
$0
$0 p.a.
80%
$546.6
Lock in a competitive fixed rate for 2 years and buy your home with a 20% deposit.
Athena Variable Home  Loan
2.24%
2.21%
$0
$0 p.a.
70%
$573.72
A low variable rate for owner occupiers with 30% deposits. No upfront or ongoing fees.
UBank UHomeLoan Fixed
1.99%
2.33%
$0
$0 p.a.
80%
$554.81
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
HSBC Home Value Loan
2.59%
2.6%
$0
$0 p.a.
80%
$600.83
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.
CUA Achieve Variable Home Loan
2.55%
2.6%
$600
$0 p.a.
95%
$597.7
Home buyers can get a competitive, low-fee variable rate plus a 100% offset account. Low deposit option available. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs.Eligible refinancers can get a $2,000 pre-paid credit card when they switch to CUA.
Well Home Loans Balanced Fixed Home Loan
1.99%
2.17%
$250
$0 p.a.
90%
$554.81
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan
2.59%
2.6%
$0
$0 p.a.
110%
$600.83
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, QLD and ACT only.
Athena Variable Home  Loan
2.29%
2.23%
$0
$0 p.a.
80%
$577.55
A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.
Well Home Loans Balanced Variable
2.52%
2.55%
$250
$0 p.a.
90%
$595.35
A very low variable interest rate for borrowers with a 10% deposit. Add a 100% offset account for $10 a month. Not available for construction purposes.
Virgin Money Reward Me Variable Home Loan
2.59%
2.76%
$300
$10 monthly ($120 p.a.)
60%
$600.83
$3,000 refinance cashback.
A variable rate loan for owner occupiers with a 40% deposit (or equity) borrowing under $500,000. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 26 February 2021 and settle by 28 May 2021.
Athena Variable Home  Loan
2.54%
2.54%
$0
$0 p.a.
60%
$596.91
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.
UBank UHomeLoan Variable Rate
2.74%
2.74%
$0
$0 p.a.
80%
$612.67
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
Macquarie Bank Basic Fixed Home Loan
2.09%
2.43%
$0
$0 p.a.
70%
$562.33
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit.
Athena Variable Home  Loan
2.59%
2.56%
$0
$0 p.a.
70%
$600.83
Athena's refinance offer for investors and owner occupiers.
UBank UHomeLoan Fixed
2.09%
2.6%
$0
$0 p.a.
80%
$562.33
Pay no ongoing fees on this investment loan fixed for 3 years.
Athena Variable Home  Loan
2.64%
2.59%
$0
$0 p.a.
80%
$604.76
A competitive investor variable rate that falls as you build equity.
HSBC Home Value Loan
2.64%
2.65%
$0
$0 p.a.
90%
$604.76
A competitive value home loan with no ongoing fee.
Macquarie Bank Basic Home Loan
2.64%
2.64%
$0
$0 p.a.
80%
$604.76
Pay no application and ongoing fees and take advantage of split and redraw options.
Athena Variable Home  Loan
2.84%
2.68%
$0
$0 p.a.
80%
$620.63
A competitive interest-only investor rate with no application or ongoing fees. Requires a 20% deposit.
AMP Bank Essential Home Loan
3.34%
3.37%
$0
$0 p.a.
90%
$661.31
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
Athena Variable Home  Loan
2.84%
2.46%
$0
$0 p.a.
80%
$620.63
Owner occupiers can refinance to one of the most competitive interest-only rates in the market. No application fee and no ongoing fees.
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Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply).

Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.

Logo for Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)

Get a competitive variable interest rate with no application fee or ongoing fees.

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