Opting for a 15% deposit instead of a 10% deposit not only increases your chances of mortgage approval but can also unlock substantial benefits, such as reduced interest rates and waived Lenders Mortgage Insurance (LMI). The combined impact of these discounts has the potential to save you thousands of dollars throughout the life of your home loan. 

Qualifying for a 15% Deposit Home Loan 

Borrowing more than 80% of the purchase price triggers specific lending criteria for a 15% deposit home loan. To meet these requirements, consider the following: 

• Good Income: Demonstrating the means to make mortgage repayments relative to the borrowed amount is crucial. 
• Strong Asset Position: The assets you own should align with your income level and employment duration, as a low asset position raises concerns about financial management. 
• Clear Credit File: A positive credit history, with a six-month track record of timely payments on bills, credit cards, and other debts, enhances approval chances. 
• Job Stability: While a six-month employment history is typically required, some lenders may make exceptions based on a strong overall situation. 
• Deposit Meeting Genuine Savings Rule: Most lenders require at least 5% of the deposit to come from genuine savings, but some lenders may waive this requirement. 

Waived LMI Opportunities 

While typically offered to specific professionals, the possibility of avoiding LMI, a significant cost charged by the bank for borrowing over 80% of the property value, exists. To qualify for waived LMI: 

• The maximum borrowing limit is $1.5 million at an 85% Loan to Value Ratio (LVR). 
• A clear credit file and overall strong financial aspects are essential. 

Impact of Genuine Savings 

Understanding the concept of genuine savings is crucial. Most lenders require at least 5% of the purchase price as savings accrued over three months. While some lenders have this requirement, others may not, allowing your deposit to come from sources other than personal savings, such as a gift from your parents. 

Additional Costs and Considerations 

Beyond the 15% deposit, there are additional costs amounting to around 19% of the purchase price that you’ll need to complete settlement. These include LMI, stamp duty, conveyancing fees, and home loan start-up costs. First home buyers may be eligible for grants and waivers, such as the First Home Owners Grant and the First Home Loan Deposit Scheme. 

Addressing Bad Credit 

While a solid credit history is generally preferred, a specialist lender may consider your situation even with a few defaults if your overall financial situation is strong.