The cost of buying a home in Australia is climbing quickly. Recent data from the Australian Bureau of Statistics indicates that the average loan size for homeowners as of July 2024 has surged to $641,000 – an 8% increase from the previous year. If you’re considering a home loan around this amount, it’s important to know how much you’ll pay each month and how to manage those payments. Let’s look at what you need to know about handling a $600,000 home loan.
How Much Will You Pay Per Month On A $600K Mortgage?
You will pay about $3597 a month on a $600,000 mortgage with a 6% variable interest rate and a 30-year term, assuming a principle-and-interest payment structure.
Let’s compare the monthly payments for a $600,000 mortgage at interest rates of 5%, 6%, and 7%, and for loan terms of 15, 20, 25 and 30 years. We’ll calculate the monthly payments under these different circumstances to show how interest rates and loan terms affect your monthly costs.
| Loan Term (Years) | 5% Interest Rate ($) | 6% Interest Rate ($) | 7% interest rate ($) |
|---|---|---|---|
| 15 | 4745 | 5063 | 5393 |
| 20 | 3960 | 4299 | 4652 |
| 25 | 3508 | 3866 | 4241 |
| 30 | 3221 | 3597 | 3992 |
How Much Deposit Do You Need?
You would need a deposit of $150,000 for a $600,000 home loan. This amount reflects 20% of the purchase price for a property valued at $750,000. We use this $750,000 example to illustrate a common financing scenario where the home loan covers 80% of the property’s value.
If you are a first-home buyer, grants or concessions may be available to help with your deposit. For example, the First Home Guarantee allows eligible first-home buyers to purchase a home with as little as a 5% deposit, without paying Lenders Mortgage Insurance (LMI).
If you have a guarantor, you could potentially borrow up to 105% of the property’s value, eliminating the need for a personal deposit; however, it’s important to consider that the deposit is just one part of the upfront costs.
Additional Mortgage Costs To Consider
In addition to the deposit, lenders expect you to have 5% of the purchase price. This is to cover the additional costs of buying a home, like stamp duty, mortgage fees, and registration fees.
This amounts to an additional cost of about $30,000 for a $600,000 home loan.
How Much Do You Need To Earn For A $600K Mortgage?
You need an annual income of about $125,000 to afford a $600,000 home loan, assuming you don’t have any unsecured loans and have minimum monthly living expenses.
Keep in mind that actual income requirements can vary based on your personal financial situation and lender criteria.
What Process Is Involved In Getting A $600K Home Loan?
Start your home loan process by submitting an enquiry and completing an application with the required documentation to evaluate your financial situation. Work with your mortgage broker to develop a loan strategy that considers the loan type, features and interest rates. Next, ensure the property you’re interested in is appraised, to verify its market value and meet lender criteria. Your broker will then submit your complete application and supporting documents to your chosen lender.
You’ll initially receive conditional approval, which may call for additional verification or documents. Once all conditions are met, you’ll get unconditional approval, confirming your loan is fully approved. The process concludes with the loan settlement, where the lender releases funds for the property purchase.
For a detailed guide on the steps, check out our home loan application process page.
