Saved Your 5% Deposit? You're Still Around $70,000 Short

You've heard the news: The government's 5% deposit scheme just expanded. No income caps. Higher property limits. 

You've done the math: 5% of a $1.5 million Sydney home is $75,000, or $50,000 for a $1 million Brisbane property, or $47,500 for that $950,000 Melbourne townhouse. 

You've got your deposit saved. You're ready to buy, right?

Not quite.

Here's what most first home buyers don't realise until it's too late: That 5% deposit is just the beginning. On settlement day, you'll need anywhere from $40,000 to $80,000 MORE to actually take ownership of your property.

Stamp duty. Legal fees. Building inspections. Moving costs. 

These aren't optional extras – they're mandatory expenses that can derail your home purchase if you're not prepared.

Let's break down the real numbers, so you know exactly what you need before you fall in love with a property you can't quite afford to settle on.

Most first home buyers focus entirely on saving their 5% deposit. Get that sorted, get mortgage approval, buy the house. Simple, right?

Here are some guide numbers of what your buying costs can look like across Australia's major cities.

Stamp duty is the biggest shock for most buyers. It's calculated on the property's purchase price – not the loan amount – and it's due on settlement day. You can't add it to your mortgage, and you can't negotiate it away.

The amount varies dramatically by state. Victoria charges some of the highest rates in the country, which is why that Melbourne example shows stamp duty exceeding the deposit. Queensland offers more generous first home buyer concessions, but you're still looking at $30,000-$40,000 for properties near the scheme caps.

And here's the kicker: You need this money in your account on settlement day. Not next month. Not when your tax return comes through. On the day you take ownership of the property.

The expanded Home Guarantee Scheme is great news for first home buyers. But here's what it does and doesn't cover:

Let's say a Brisbane couple saves their $50,000 deposit and finds a $980,000 home within the new caps. They get mortgage pre-approval and are ready to go.

Then their conveyancer sends the settlement statement.

This is the gap that catches people. You've done everything right – saved your deposit, got mortgage approval, found a property within your budget. But settlement day requires a second chunk of cash almost as large as your deposit itself.

Here's where it gets frustrating. Your mortgage broker has secured you a great rate and navigated the 5% deposit scheme. You're approved for the property purchase.

But when you ask, "Can we add the stamp duty to the loan?" the answer is no.

Banks legally cannot lend money for settlement costs. Your home loan covers the property purchase only. Settlement costs such as stamp duty, legal fees, inspections must be paid from your own funds. This is regulated and non-negotiable across every bank in Australia.

This is exactly the gap that settlement gap finance fills. We work alongside your mortgage broker – they handle the property loan, we handle the settlement costs that banks won't touch.

Settlement gap finance is designed specifically to cover the costs associated with buying a home that sit outside your mortgage.

How It Works

1. You've secured mortgage pre-approval and found a property
2. You've saved your 5% deposit
3. You calculate your settlement cost gap
4. We provide a loan specifically for those costs
5. You settle on time without completely draining your savings

You could wait another 1-2 years to save an extra $50,000 for settlement costs. But what happens to property prices in that time?

If increased scheme accessibility drives even modest price growth, that $950,000 Melbourne property could be $1,045,000 in 12 months. You've ‘saved’ $50,000, but now need an extra $52,250 just for the increased deposit – plus higher stamp duty on the larger purchase price.

Settlement gap finance lets you enter the market at today's prices without either waiting years to save more, or completely depleting your emergency savings. The costs you're financing – stamp duty, legal fees, inspections – aren't optional. You're going to pay them whether you buy now or later. The question is whether you pay them at today's property prices or tomorrow's higher ones.

Let's say we finance a $42,000 settlement cost gap for a $980,000 Brisbane purchase. Six months later, similar properties in that area are listing at $1.05-1.1 million. 

By acting when they did (using settlement gap finance for costs they'd have eventually paid anyway) that buyer has built $70,000-$120,000 in equity while paying off the settlement finance over time.

What to Do Next

The 5% deposit scheme opened the door. Settlement gap finance helps you walk through it.

We work alongside your mortgage broker to cover the gap that home loans won't touch. Soft credit check only – won't impact your score while you're planning.