Simple hacks to save faster for your deposit

Most lenders require a deposit of at least 5% of the property value, though putting down 20% or more lets you avoid Lenders Mortgage Insurance and access lower rates.

For buyers in Highett, where the proximity to Southland Shopping Centre and the train line keeps demand steady, building a deposit can feel like you're chasing a moving target. Property values shift while you save, and the gap between what you have and what you need can widen faster than you expect. Understanding how much you actually need and which government schemes might reduce that amount makes the process more manageable.

How much deposit do you actually need for a property in Highett

The minimum deposit for most home loans is 5% of the property value, though you'll pay Lenders Mortgage Insurance if you borrow more than 80% of the property value. A 20% deposit avoids LMI and typically unlocks lower interest rates and better loan features.

For a median-priced property in Highett, a 20% deposit would be substantial, and you'd also need to budget for stamp duty, legal fees, building and pest inspections, and other settlement costs. If you're buying as a first home buyer, you may qualify for stamp duty concessions or exemptions in Victoria, which reduces the cash you need upfront. The Australian Government 5% Deposit Scheme allows eligible buyers to purchase with just a 5% deposit without paying LMI, because Housing Australia guarantees up to 15% of the property value to the lender. The scheme has no income cap and no annual place limits, though property price caps do apply.

Consider a buyer looking at a unit close to Highett Station. With a 5% deposit, they'd still need several thousand dollars for settlement costs on top of the deposit itself. If they're eligible for the 5% Deposit Scheme and a first home buyer stamp duty concession, the amount they need in accessible savings drops considerably compared to a traditional 20% deposit scenario.

Using the 5% Deposit Scheme without losing your LVR advantage

The 5% Deposit Scheme is designed for first home buyers who have steady income but haven't yet saved a full 20% deposit. You'll still borrow up to 95% of the property value, but the government guarantee replaces the need for LMI, which can otherwise add thousands of dollars to your upfront costs or loan balance.

Applications are made through participating lenders, not directly through Housing Australia. Not every lender on the panel offers the same loan products or interest rates, so it's worth comparing your options before committing. In Victoria, the property price cap is $950,000 for capital cities and regional centres, which covers most of Highett. Both the purchase price and the lender's valuation must fall at or below that cap for you to remain eligible.

One limitation is that you can't combine the scheme with Help to Buy, though you can usually stack it with state-based stamp duty concessions. If you're planning to purchase in the next few months and you're close to a 5% deposit, the scheme can bring your timeline forward without the LMI cost that would normally accompany a high loan to value ratio.

Structuring your savings between offset and actual deposit

Once you've saved your deposit and covered your settlement costs, any remaining funds can go into an offset account linked to your home loan. Every dollar in offset reduces the interest you're charged on your loan balance, which over time can cut years off your loan term and save you a significant amount in interest.

Some buyers in Highett keep a smaller buffer in offset and put the rest toward a larger deposit to lower their LVR. Others prefer to keep more in offset for flexibility, particularly if they're self-employed or expect irregular income. There's no single answer, but the trade-off is clear: a larger deposit means lower repayments and potentially a lower interest rate, while a well-funded offset account gives you access to cash if you need it and still reduces your interest over time.

If you're using a low-deposit scheme, your offset options may be more limited depending on the lender. Some lenders on the 5% Deposit Scheme panel offer full offset accounts, while others don't. That's worth confirming early, because the ability to park extra savings in offset and reduce interest from day one can make a tangible difference to your loan cost over the first few years.

What counts as genuine savings and what doesn't

Lenders assess the source of your deposit to determine whether it's genuine savings, a gift, or borrowed funds. Genuine savings are funds you've accumulated over at least three months in your own accounts, such as regular salary deposits into a savings account or term deposit. Most lenders require at least 5% of the property value to come from genuine savings if you're borrowing above 90% LVR.

Gifts from immediate family members are generally accepted, but you'll need a signed statutory declaration confirming the funds are a gift and not a loan. Borrowed funds, including personal loans or credit card advances, are not accepted as part of your deposit and will actually reduce your borrowing capacity because they increase your liabilities.

First Home Super Saver Scheme withdrawals are treated as genuine savings by most lenders. The scheme lets you make voluntary contributions into your super fund and later apply to release up to $50,000 of those contributions, plus deemed earnings, toward your first home deposit. You'll pay tax on the withdrawal, but the concessional tax treatment while the funds are in super can help you save faster than you would in a standard savings account.

Building deposit faster using a split savings strategy

Some buyers in Highett use a split approach: part of their savings goes into a high-interest savings account with monthly deposit requirements to maximise the rate, and part goes into a term deposit or offset account that's harder to access. The psychological separation helps reduce the temptation to dip into deposit savings for non-essential spending.

Another option is salary sacrificing into super and using the First Home Super Saver Scheme to withdraw it later. Because concessional contributions are taxed at 15% inside super rather than your marginal rate, you keep more of each dollar you save. The withdrawal is taxed, but the net result is usually better than saving in a standard account, particularly if you're on a middle to higher income.

If you're saving as a couple, consider opening a joint savings account with both names on it. This makes it easier to demonstrate genuine savings when you apply for a loan, and it avoids the need to transfer large sums between individual accounts close to settlement, which can raise questions during the lender's assessment.

When a guarantor can replace part of your deposit

A family guarantee allows a parent or close relative to use the equity in their own property as security for part of your loan, which can reduce or eliminate the need for a cash deposit and avoid LMI. The guarantor doesn't hand over any money; they simply allow the lender to register a second mortgage over a portion of their property's equity.

This approach works when you have steady income and can service the full loan repayments, but you haven't yet saved a full deposit. It's common among buyers in Highett who work locally or in the city and have stable employment but are priced out of saving a 20% deposit while also paying rent. The guarantor's exposure is limited to the portion of the loan above 80% LVR, and most lenders allow you to refinance and release the guarantor once you've built enough equity in your own property.

The risk sits with the guarantor: if you default, the lender can pursue their property to recover the debt. That makes it essential to structure the loan carefully and ensure everyone involved understands the obligations. We regularly see this option used successfully, but it requires clear communication and independent legal advice for the guarantor before proceeding.

Call one of our team or book an appointment at a time that works for you. We'll review your savings position, check your eligibility for government schemes, and structure a loan that gets you into your Highett home sooner without unnecessary cost.

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