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Buying PPOR with minimal deposit

Discussion in 'Real Estate' started by robmillion, 20th Jan, 2010.

  1. robmillion

    robmillion Member

    13th Jun, 2009
    Melbourne, Vic
    Hey all, looking for some advice.

    Currently in the market as a FHB and looking to purchase a modest PPOR for around $280k - $290k with a 95% LVR using $9k FHOG. My problem is that I don't have enough savings to cover the shortfall for deposit (factoring in Stamp Duty, Mortgage Insurance, Loan costs and Legals). I have $75k tied up in shares that I'm not keen on selling just yet.

    What options do I have other than to wait and save?

  2. davo6253

    davo6253 Well-Known Member

    11th Jul, 2008
    Melbourne, Victoria
    Not sure on the technicalities of this but getting a margin loan against the shares to then use the cash to put for extra deposit? Not sure how that would work security wise with the bank/institution though.
  3. Billv

    Billv Getting there

    15th Jul, 2007
    Sydney, NSW
    I'd sell the shares.
    You'll be saving at least 6% in interest (which is like a 9% guaranteed return before tax)

    What shares are they?
    IMO the share market will probably go sideways for a loong while
    so if I can get a guaranteed return of 10% now I'd take it.

    You will not only save interest but if you put down 20% you will not need to may mortgage insurance so you save that way as well.

    Or you can wait until you have a bigger deposit
  4. GregR

    GregR Well-Known Member

    13th Jul, 2009
    Berwick Vic
    For a $290k property in Vic, with PPR concession stamp duty and costs are just on $12k. There are not many lenders lending 95% anymore unless you are an existing customer (it could be a credit card or savings account). As it will require LMI (<80%) the insurers are wanting to see genuine savings. The $75k share should qualify you for that.

    Minimum deposit will be around $29k to $32k depending on lender and LMI costs. LMI is normally added to the loan so it is not directly funded by you upfront. FHOG of $9k assists and you could sell some of the shares to make the difference. You can see the advantage of FHB's 8 months ago taking advantage of the Boost and Bonus on offer.

    The other option is look at family support by way of a guarantee, different lenders use different methods but the main lenders do offer the family guarantee/pledge option, normally provided by parents.
    Let me know if I can help.
    Good luck