Should You Use a Big or Small Deposit When Buying a Property?

Published: May 24, 2020, 12:11 p.m.

b"https://www.youtube.com/watch?v=SJcO8k4lCgo\\n\\n\\n\\n\\n\\n\\n\\n\\nShould you use a big deposit of 20%+ when investing in property or a smaller deposit of around 5 or 10%? There are pros and cons to each which we look at in today's episode.\\n\\n\\n\\nProperty Tools\\n\\n\\n\\nBook a Free Property Strategy\\n\\n\\n\\n0:00 - Introduction0:39 - What everyone else says you should do1:25 - The 4 major considerations1:56 - 1. Lenders Mortgage Insurance3:51 - 2. Market Timing (Getting Into The Market Sooner)5:35 - 3. Risk Profile8:15 - 4. Cashflow11:33 - It's not a clear cut decision12:46 - What is your strategy/end goal?\\n\\n\\n\\nRecommended Videos:\\n\\n\\n\\nMay 2020 Update\\n\\n\\n\\nWhat is Lenders Mortgage Insurance\\n\\n\\n\\nThe 2 Year Strategy\\n\\n\\n\\nHow To Enjoy Saving Money\\n\\n\\n\\nTranscription:\\n\\n\\n\\nRyan 0:00let's talk deposits when you're investing in a property should you use a big deposit of 20% or more so you don't have to pay lenders mortgage insurance or should use a smaller deposit somewhere around 5% or 10% so that you can get into the market quicker and maybe expand your property portfolio quicker as well different people say different things but it's ultimately up to you to assess what's going to be best for your situation and your risk profile so in this video we're going to be talking about big deposits for a small deposit what are the pros and cons of each so hey i'm ryan from onproperty helping you and your journey to financial freedom and as definitely people out there that are like no matter what the circumstances you should always use a 20% deposit to avoid lenders mortgage insurance so you don't have to pay that and so i understand that that that makes a lot of sense and we will talk about that more but then you've got people on the other side that say you should use the smallest deposit possible so that you've then got more money to invest in properties also you can get into the market quicker and get capital growth faster and so we'll talk about that as well but i'm just seeing people out there and say you should definitely do this or you should definitely do this no you should definitely do anything ultimately it comes down to you and everyone's goals and everyone's risk profiles and what everyone wants to do is different so in this video we're going to be talking about some of the different pros and cons of each and so you can actually look at yourself assess yourself and decide okay where do i sit on the spectrum and what do i want to do so let's look at some of the major things so the major things we're going to look at firstly going to be lenders mortgage insurance and talk about that because that can be a big cost we're going to talk about cash flow and how the size of your deposit affects your cash flow we're also going to talk about timing the market and we're gonna talk about your risk profile as well so let's start by talking about lenders mortgage insurance now i've done a full video on exactly what this is a couple of years back so i'll link up to that down below but really simply this is insurance that if you don't have a large enough deposit and usually that's 20% on residential property investments if you don't have that large amount of margin off deposit the banks are taking an extra risk giving you a loan and they want insurance to cover that risk in case you have to sell the property and the markets going down and they lose money just to put a disclaimer out there i'm not a mortgage broker or insurance broker but they they charge you this insurance and that's an extra fee that you have to pay either for paid upfront or often it's added on to your loan and so that's an extra fee that you paid to the banks and ensures them against the extra risk they're taking on us then the insurance isn't necessarily for you it's for them so a lot of people see that as a last costs or something that you have to pay that you don't really see any major benefit from so this is why people often recommend that you save at least a 20% deposit i know with building granny flats you ..."