There are two types of deposits in property lending: deposit as a contribution towards a loan and a deposit for when purchasing a home. Both are very different.
A loan deposit is the difference between the purchase price and the loan amount; specifically the borrower’s contribution to qualify for a loan. All lenders are slightly different, however most have loan products to borrow up to 90% of the property value; this is often referred to as the loan to value ratio (LVR). A 90% LVR would mean that the borrower is contributing the other 10%.
Reserve Bank regulations allow for only 10% of a lender’s home loan customers to have an LVR of over 80%. If you are looking to borrow more than the 80% threshold, you should speak to your Mortgage Express mortgage adviser. This type of situation is not always straight-forward, and professional advice will help outline the full range of options available to you, such as the way you structure your loan, or using different lenders.
A home deposit refers to the amount of deposit required as part of the purchase contract and this is often either negotiated as a dollar amount (ie $25,000) or a percentage of the property value (ie 10%). This type of deposit can be discussed with the real estate agent when negotiating on price.