How a $60K Deposit Saved Over $450K in Interest
A Real Client Case Study:
How a $60,000 extra deposit saved this buyer over $450,000 in interest
When buying a home, your deposit size can significantly impact the interest rate you’re offered, the fees you pay, and the overall cost of your mortgage. This real-world example shows just how powerful getting to a 20% deposit can be.
Note: In this example, the client was on a high income, so increasing the deposit by $60,000 was achievable. However, the same principles apply regardless of income level. For clients on a more modest budget, we’d simply be working with a lower purchase price and deposit amount relative to their financial position. Reaching a 20% deposit offers significant benefits such as better rates, reduced interest, and potential cash contributions. These advantages remain just as valuable, regardless of income level.
The Situation:
Purchase price: $1.3 million
Client's original deposit: $200,000 (LVR = 84.62%)
Scenario 2: Client stretches to increase deposit to $260,000 (LVR = 80%)
We ran the numbers to compare what happens if the client pays the same amount weekly ($1,442.80) in both scenarios.
The Results:
Interest paid
Smaller Deposit ($200k) vs 20% Deposit ($260k)
Loan Amount $1,100,000 vs $1,040,000
Bank Cash Contribution $0 vs $9,360
Effective Loan Balance $1,100,000 vs $1,030,640 (after rebate)
Interest Rate 5.54% (with low equity margin) vs 4.95%
Weekly Payment $1,442.80 vs $1,442.80
Loan Term (at that payment) 30 years vs just under 23 years
Total Interest Paid $1,158,392 vs $694,855
Interest Saved $463,537
Key Takeaways:
Higher deposit = lower interest rate + competitive cash rebate + more of weekly payment going towards principal
Client saves over $450,000 in interest just by contributing $60,000 more upfront
Pays off the mortgage 7 years sooner with the same weekly repayments
The 20% deposit opens access to better bank offers, including cashback incentives and sharper pricing
Could you benefit too?
If you're house hunting and close to a 20% deposit, it might be worth exploring ways to get there, whether that’s saving a bit more, accessing family support, or selling an asset. The long-term payoff can be significant.
If you'd like me to run the numbers for your own situation, feel free to get in touch. A small shift in your deposit could make a huge difference to your financial future.