Q: What are the benefits of a low deposit home loan?
- Enter the property market sooner
One of the primary benefits of a low deposit home loan is that it can help you enter the property market sooner. With a low deposit home loan, you only need to save up a small deposit, usually between 5-10% of the property’s value. This means that you can start looking for a property and begin building equity in your home earlier than if you were saving for a larger deposit.
- Save on rental costs
Renting can be expensive, especially in major cities like Sydney and Melbourne. With a low deposit home loan, you can save on rental costs by becoming a homeowner. Your monthly home loan repayments may be comparable to or even lower than your current rent payments, depending on the property and loan terms.
- Build equity in your home
Another benefit of a low deposit home loan is that it allows you to build equity in your home. Equity is the difference between the property’s value and the amount you owe on your home loan. As you make repayments on your home loan, your equity in the property increases. Over time, this equity can be used to refinance your loan or invest in additional properties.
- Tax benefits
Owning a home can provide tax benefits in Australia. For example, you may be eligible to claim deductions for mortgage interest payments, property taxes, and other home-related expenses. Additionally, if you choose to rent out your property, you may be eligible for tax deductions on rental expenses, including repairs, maintenance, and depreciation.
- Greater flexibility
A low deposit home loan can provide greater flexibility in terms of your financial situation. For example, if you experience financial hardship, you may be able to apply for a repayment holiday or switch to an interest-only repayment plan. Additionally, you may be able to make extra repayments on your loan to pay it off faster or use a redraw facility to access these funds if needed.