How to buy a $840,000 house in Australia
In this article, we’ll look at all the factors that go into buying a $840,000 property in Australia. We’ll look at the deposit you’ll need to save, LMI considerations, the average fees & stamp duty on a $840,000 house, the estimated FHOG, how much interest you’ll pay on the mortgage and the amount you need to earn to buy a $840,000 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 $840,000 property (no LMI)
In Australia, to avoid paying Lenders Mortgage Insurance (LMI), you typically need a deposit of at least 20% of the property’s purchase price. For a house priced at $840,000, this means you would need a minimum deposit of $168,000. This calculation is based on the formula: 20% of $840,000, which equals $168,000. Therefore, to avoid LMI, you should aim to save at least $168,000 for your deposit.
Minimum deposit to buy a $840,000 property (with LMI)
To buy a house priced at $840,000 in Australia with Lenders Mortgage Insurance (LMI), you typically need a minimum deposit of 5% of the purchase price. This equates to $42,000. However, with a 5% deposit, LMI is required, which can be approximately 2% of the loan amount. For an $798,000 loan ($840,000 – $42,000), the LMI could be around $15,960. Therefore, the total minimum deposit needed, including the estimated LMI cost, would be $57,960.
Mortgage fees for a $840,000 house
When purchasing a house in Australia for $840,000, you can expect additional fees such as stamp duty, legal fees, and inspection costs. Stamp duty varies by state but can be approximately $32,000. Legal fees for conveyancing typically range from $1,000 to $2,000. Building and pest inspections may cost around $600. Additionally, if you are taking out a mortgage, you might incur loan application fees, which can be about $500. Therefore, the estimated additional fees could total around $34,100 to $35,100. Always consult with local professionals for precise calculations.
Estimated FHOG for $840,000 purchase
The First Home Owner Grant (FHOG) in Australia varies by state and territory, and eligibility criteria must be met. Generally, the grant is available for new homes, not established properties. For example, in New South Wales, the FHOG provides $10,000 for new homes valued up to $750,000. Since the house price of $840,000 exceeds this limit, you would not be eligible for the FHOG in NSW. It’s important to check the specific guidelines and thresholds for the state or territory where you are purchasing the property to determine your eligibility and the grant amount.
Estimated mortgage interest on a $840,000 home purchase
To estimate the total interest paid on a house priced at $840,000 in Australia over a 30-year mortgage, we can use the average interest rate of approximately 7% over the last 50 years. Assuming a fixed-rate mortgage, the monthly payment can be calculated using the formula for a fixed-rate mortgage. The total interest paid over the life of the loan can be found by subtracting the principal from the total amount paid. For a $840,000 loan at 7% interest over 30 years, the monthly payment is approximately $5,595. The total amount paid over 30 years is $2,014,200, resulting in approximately $1,174,200 in interest.
How much do you need to earn to buy a $840,000 house?
To afford a mortgage on a house priced at $840,000 in Australia, with a 20% deposit ($168,000), you would need to borrow $672,000. Over the last 50 years, the average interest rate in Australia has been around 7%. Assuming a 30-year loan term, the monthly repayment would be approximately $4,470. Financial experts recommend that mortgage repayments should not exceed 30% of your gross monthly income. Therefore, you would need to earn around $14,900 per month, or approximately $178,800 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.
