Browse Forums Home Finance 1 Jun 12, 2010 1:15 pm Hi All My 18 year old son has just started saving money for his first house. He works on the mines so earns a good income. He will be saving 2k a month. He could probably do another 1k but i think that would take to much play money away. Us oldies can go without $200 jumpers or $80 back packs. If only we could give them our wisdom. The money he wastes amazes me. He has been working on the mines for nearly six months and has blown the lot which is why we have now put our foot down to save some money. My question is what is the percentage of deposit he needs before he doesnt have to have mortgage insurance. You can still get a little 3 bed house for around $200k or unit for around $200K close by. Whether he would live in it or rent it out i am unsure. He would be easily be able to make the payments but think he would be silly to live there for two reasons. 1. He is only home 17 weeks a year. So why not stay at home with the oldies and rent the house out. That way he could still pay a extra 2k a month on top of the rent into the mortgage. 2. He is really not mature enough and going by how he keeps his room the house would be a pig sty. Oh and this also helps me win the bet i have with my brother lol Bet him $50 that son will not have a SS Commodore by end of the year lol. Seems to be what the kids who work on the mines buy. Thanks Caz Re: What percentage of deposit so no mortgage insurance 2Jun 12, 2010 2:01 pm Hi Caz, Generally you need have at least 20% deposit of the value of the home to not need mortgage insurance. It does vary from bank to bank..some require more. Here's a link to an estimator I found through a Google search. http://www.yourmortgage.com.au/calculat ... insurance/ Cheers Re: What percentage of deposit so no mortgage insurance 3Jun 12, 2010 2:14 pm Hi Caz, We paid 20% down payment to get away from the LMI.A friend of mine negotiated with his bank for 15% as he had an account with that bank for a while and the bank didnt want to loose such a valued customer.Guess negotiation does work sometimes. Cheers Re: What percentage of deposit so no mortgage insurance 4Jun 12, 2010 2:35 pm Most banks are 20% deposit saved over a minimum period of 6mths - you need to show proof of regular savings ie statements / passbook. As well as the 20% deposit they may also ask that he have all his fees saved as well - although some places let you use your FHOG to cover these. Lenders differ. Also don't forget if he buys a place to rent out he will forfeit any first home buyers benefits. Some things are worth waiting for. Re: What percentage of deposit so no mortgage insurance 6Jun 15, 2010 10:48 am As the above posters have said, 20% is the norm and you might be able to get 15%. Some Banks/Lenders will also allow you to go guarantor for a small portion of the loan to avoid LMI. There are risks and small additional fees but it can save alot of money. Need help with travel insurance? Visit my site: Travel Insurance Reviews Re: What percentage of deposit so no mortgage insurance 7Jun 15, 2010 9:42 pm Hi everyone Thank you all very much for your replies. 20% it is. Been such a long time we have had to worry about that i had no idea. Fingers crossed he will have his 20% just before his 20th birthday. That will stop him getting a new car with a milo tin for an exhaust for a while. lol Thanks Caz Re: What percentage of deposit so no mortgage insurance 9Jun 16, 2010 10:21 am Although he would need to have a 20% deposit to avoid LMI this may not be the best option for him. Saving $40,000 or so will still take him quite some time and so it may be better for him to borrow 90% and pay the LMI. If the market in your area is rising then the lost capital gains will be much more than the LMI. If the market is flat then it is fine for him to wait and save a 20% deposit. Just so you have an idea of the figures: $200,000 purchase price, $190,000 loan (95%) would have LMI of approximately $3,940 $200,000 purchase price, $180,000 loan (90%) would have LMI of approximately $1,892 $200,000 purchase price, $170,000 loan (85%) would have LMI of approximately $1,005 You can use our LMI calculator to check other loan amounts / purchase prices. As your son is in the mining industry he is likely a contract employee. In this case unless he has a 1 year history in the same job and has a contract that extends for a further year then many lenders will not lend to him. Mining contractors can borrow up to 90% though a major lender. Each lender has their own opinion as to how risky contractors are and so it is essential to apply with a lender that sees contractors in a favourable light. Hope that helps and good luck getting your son to save! Re: What percentage of deposit so no mortgage insurance 10Jun 17, 2010 12:34 am Hi JB Thanks heaps for your reply. Dont know why but i thought the insurance was like 10k-15k. If its only a few k that is not a problem at all. He will be looking for something around 300K mark. No he isnt a contractor. He is a apprentice. By the time he has saved his deposit he will have been there 1 1/2 years and will be on around 85K. These kids earn way too much money and you need to help them control there finances. Thanks Caz Re: What percentage of deposit so no mortgage insurance 11Jun 17, 2010 6:08 pm Not bad for an apprentice! Yeah sounds like paying LMI makes more sense than saving a 20% deposit for his situation. Just make sure he doesn't go out and get a car loan and boat loan! Re: What percentage of deposit so no mortgage insurance 12Jun 18, 2010 7:31 pm We paid mortgage insurance on both our loans. It's hard to be able to come up with the full 20% when you are still living and paying rent, or a mortgage, etc. It wasn't that much, we just included it in the loan and it barely made a difference to the fortnightly repayments. Good luck to your son Bek I'm back Re: What percentage of deposit so no mortgage insurance 13Jun 19, 2010 11:54 am Hi everyone, Thanks everyone for all your replies and advice. Greatly appreciated. Caz Re: What percentage of deposit so no mortgage insurance 14Jul 01, 2010 10:34 pm shackonthehill Hi everyone, Thanks everyone for all your replies and advice. Greatly appreciated. Caz it helped me as well, very informative VICTORY 1800, EN-SUITE, DOUBLE GARAGE, FAMILY ROOM AND ALFRESCO Land Settled: 20 July 2010 Site Scrap: 30 August 2010 Slab Pour: 20 September 2010 Frame Complete: 23 September 2010 Fascia and Gutters: 28 September 2010 Roof Complete: 06 October 2010 Lock-up complete: 28 October 2010 Plaster complete: 29 October 2010 Fix-out complete: 22 Nov 2010 PCI 7 FEBRUARY 2011 In NSW the maximum deposit for building work is 5% until the builder provides HBCF insurance 1 4785 Hi there, long-time lurker but first time posting. I've bought a house 2 and a bit years ago and last year we had some major water damage on a converted pergola area… 0 7875 I apologise for any confusion, but your understanding is correct. We approached our situation differently based on advice from… 11 53085 |