This case study is based on real clients who had issues with not having enough savings to cover stamp duty & other fees with their low deposit home loan. For the purposes of this article we’ll call them Brad & Angelina. The names & certain details have been changed in the interest of privacy for the borrowers, however the key facts and how we were able to solve their problem remain the same.
Brad and Angelina were First Home Buyers who had managed to save a 5% deposit. They were looking to buy a home priced above $430,000. At the time of their enquiries there was no stamp duty for first home buyers when purchasing property valued below $430,000, however when buying a property with a higher value, stamp duty would come into effect.
This meant that Brad and Angelina did not have enough money to cover both their deposit and the stamp duty. Extra savings would be needed to not only cover the additional stamp duty but also Lenders Mortgage Insurance (LMI) that most lenders charge for low deposit home loans.
They did not have family that were able to help them with a gift and they were keen to purchase a home sooner rather than later.
The solution was to secure them a personal loan for the additional funds to cover the extra costs to buy their first home. It’s important to note that they’d already saved a 5% deposit and the personal loan was just to cover the extra fees & charges.
In Brad and Angelina’s case, it also helped that they both had strong incomes and stable long-term employment. This was crucial in both themselves feel comfortable they were able to pay both the personal loan & low deposit home loan as well as satisfying the lenders requirements.
These factors, together with our assistance, made it possible for Brad and Angelina to get into their first home without having to wait to save more money.