An important consideration for many first home buyers is deciding whether to buy a home now or to wait and save a larger deposit. It means weighing up the cost of LMI, and any other fees lenders may charge for low deposit lending, against the potential savings of getting into the property market before house prices rise even further. And that’s a tough decision to make! Now, with a useful comparison tool, that decision may be a little easier.

Weighing up the options

When it comes to buying a first home, it’s hard to know which decision is right – buy now and pay LMI, or save a bigger deposit but possibly end up spending more on a first home later.

LMI is an insurance that lenders charge to low deposit borrowers. It protects the lender against potential defaults the borrower may have, and is paid either as an addition to the home loan amount or charged as a one-off fee. LMI can amount to a sizeable fee depending on how much deposit you have and the type of loan you’re applying for.

On the other hand, while house prices may be softening in some areas around the country, it’s hard to know how long this trend could continue for. Going by historical data, it’s quite likely house prices will continue rising in time, albeit at a slower pace. Putting off buying a first home now could mean entering the property market at a much higher price point in a year or two.

Supporting first home buyers

To help with this decision, Genworth’s Deposit Comparison Estimator lets you look at the options available to you using your deposit. By simply entering basic information, you’ll be provided with an estimation of costs across six scenarios:

• Save a 20% deposit
• Buy with LMI capitalised
• Buy with LMI Monthly Fee
• Buy with Family Assistance
• Buy with Guarantor
• Buy with First Home Guarantee (previously known as the First Home Deposit Loan Scheme (FHLDS)

What’s more, each deposit option also includes the key considerations based on the estimates you provide, and when each scenario could work. It also lets you project assumptions 10, 20 and 30 years ahead with a snapshot of future value, so you can work out your future financial situation and make your decision with confidence.

Accessing knowledgeable advice

Having the right team on your side is another important part of the first home buyer journey. It can mean the difference between success and failure. A knowledgeable mortgage broker not only helps you put together a successful home loan application, but they can also put you in touch with the right lender, and help structure your home loan so you get the most out of it.

If you’re deliberating between buying now with the deposit you have already saved and putting off buying a first home until you can save a bigger deposit, contact a Mortgage Express mortgage broker today. They’ll review your options and help you make an informed decision, while guiding you on your first home buyer journey.

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.