How to buy a $1,850,000 house in Australia
In this article, we’ll look at all the factors that go into buying a $1,850,000 property in Australia. We’ll look at the deposit you’ll need to save, LMI considerations, the average fees & stamp duty on a $1,850,000 house, the estimated FHOG, how much interest you’ll pay on the mortgage and the amount you need to earn to buy a $1,850,000 home.
We’ve provided this information to give rough estimates. Need specific information that suits your financial situation? Speak to a local mortgage broker.
Note: This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
Minimum deposit to buy a $1,850,000 property (no LMI)
In Australia, to avoid Lenders Mortgage Insurance (LMI), you typically need a deposit of at least 20% of the property’s purchase price. For a house priced at $1,850,000, the minimum deposit required would be 20% of $1,850,000. Calculating this, 20% of $1,850,000 is $370,000. Therefore, you would need a minimum deposit of $370,000 to buy a house priced at $1,850,000 without incurring LMI.
Minimum deposit to buy a $1,850,000 property (with LMI)
To buy a house priced at $1,850,000 in Australia with Lenders Mortgage Insurance (LMI), you typically need a minimum deposit of 10%. This equates to $185,000. LMI is required because the deposit is less than 20% of the property value. The cost of LMI varies but is generally around 2% to 3% of the loan amount. For a loan of $1,665,000 (property price minus deposit), the LMI could range from approximately $33,300 to $49,950. Therefore, the total minimum deposit needed, including the estimated LMI cost, would be around $218,300 to $234,950.
Mortgage fees for a $1,850,000 house
When purchasing a house in Australia for $1,850,000, you can expect additional fees such as stamp duty, legal fees, and inspection costs. Stamp duty varies by state but can be approximately 4-5% of the purchase price, which would be around $74,000 to $92,500. Legal fees typically range from $1,500 to $3,000. Building and pest inspections may cost between $400 and $1,000. Additionally, if you are taking out a mortgage, there may be loan application fees and lender’s mortgage insurance if your deposit is less than 20%. Overall, you should budget for an additional $80,000 to $100,000 in fees.
Estimated FHOG for $1,850,000 purchase
The First Home Owner Grant (FHOG) in Australia varies by state and territory, and it is typically available for new homes rather than established properties. As of my knowledge cutoff in 2023, the grant amount and eligibility criteria differ across regions. For instance, in New South Wales, the FHOG offers $10,000 for new homes valued up to $750,000. Given that the house price is $1,850,000, it significantly exceeds the maximum value threshold for the FHOG in any state or territory. Therefore, you would not be eligible for the FHOG when purchasing a house at this price in Australia.
Estimated mortgage interest on a $1,850,000 home purchase
To estimate the total interest paid on a $1,850,000 house in Australia over a 30-year mortgage, we can use the average interest rate of approximately 7% over the last 50 years. Using a standard mortgage calculator, the monthly payment for a 30-year loan at 7% interest would be around $12,300. Over 30 years, this totals approximately $4,428,000. Subtracting the principal amount of $1,850,000, the estimated total interest paid would be around $2,578,000. This is a rough estimate and actual interest paid can vary based on the specific terms of the mortgage and changes in interest rates.
How much do you need to earn to buy a $1,850,000 house?
To afford a mortgage on a house priced at $1,850,000 in Australia, with a 20% deposit of $370,000, you would need to borrow $1,480,000. Over the last 50 years, the average interest rate in Australia has been around 7%. Assuming a 30-year loan term, monthly repayments would be approximately $9,850. Financial experts recommend that mortgage repayments should not exceed 30% of your gross monthly income. Therefore, you would need to earn around $32,833 per month, or approximately $394,000 annually, to comfortably afford the repayments on this mortgage.
Mortgage advice
The above information is to be used as rough estimates – we’d recommend you speak to a mortgage broker to give you specific information about your unique circumstances.
