Check both lenders before borrowing
There are two separate lending decisions. A personal lender agreeing to lend money does not establish that a mortgage lender will accept it as your deposit. Treat a deposit shortfall as a home-finance planning question before choosing a personal-loan rate.
- Personal-loan purpose: explain that the money would fund a property deposit. Check the permitted uses in the application and terms. NAB expressly excludes home-loan deposits and lenders mortgage insurance from its personal-loan purposes.
- Mortgage acceptance: ask whether borrowed funds are acceptable for your particular loan, property and deposit contribution, and what evidence is needed.
- Affordability: have the proposed personal-loan repayment included in the home-loan assessment. CommBank's application checklist, for example, asks for income, living expenses and existing debts.
Give both lenders the same complete information. Do not select a different purpose to get around an exclusion.
A deposit is not the same as genuine savings
Four amounts can get mixed together when planning a purchase. Keep them separate in your budget and lender discussion.
| Term | What to check |
|---|---|
| Your deposit contribution | The purchase money you contribute alongside the home loan. Ask which sources the lender accepts. |
| Genuine savings | Evidence about your savings history or an accepted alternative. A lump sum appearing in your account does not answer that question by itself. |
| Contract deposit | The payment due under the purchase contract. Confirm its amount, timing and conditions with your conveyancer. |
| Buying costs | Money for applicable duty, legal work, inspections and other purchase expenses, beyond the price contribution. |
Great Southern Bank explains savings evidence; Westpac distinguishes the purchase-contract deposit from your overall contribution. Requirements vary. Ask how gifts, sale proceeds or other funds would be treated rather than relying on a universal savings percentage or waiting period.
Measure the extra repayment, not just the extra cash
Borrowing $20,000 gives you $20,000 in cash before any deducted fees, alongside a $20,000 liability. It does not create $20,000 of net savings. Moneysmart explains that mortgage assessment considers debts, income and expenses as well as the deposit.
Illustration only: a $20,000 personal loan at a fixed 10% p.a. over five years would require approximately $424.94 a month. Total repayments would be $25,496.45, including $5,496.45 interest. This assumes monthly principal-and-interest repayments, no fees, no extra payments and no rate changes. It is not a lender quote.
Add that repayment to the proposed mortgage and ownership budget: rates, insurance, maintenance and any strata costs. Then test reduced income or higher household expenses. The example does not calculate mortgage borrowing power; the lender must reassess that. Do not assume the mortgage amount will stay unchanged simply because the cash deposit is larger.
Check alternatives to a borrowed deposit
Ask a home lender or mortgage broker to compare complete purchase plans, including upfront costs, ongoing repayments and any family exposure.
- A smaller purchase or more time to save: work out the gap after buying costs and keep an emergency reserve separate. Moneysmart's deposit guide can help set the target.
- The Australian Government 5% Deposit Scheme: eligible first-home buyers may buy with a minimum 5% deposit without LMI. Property price caps, occupancy rules and other criteria apply. The guarantee supports the lender; you remain responsible for the loan. Scheme eligibility does not guarantee home-loan approval.
- First Home Super Saver: eligible buyers can use qualifying voluntary super contributions and associated earnings through the scheme. It is not unrestricted access to your super. Check eligibility, release requirements and timing with the official scheme guidance before contributing or committing to a purchase.
- Grants and family help: check the state or territory first-home grant rules and ask how any genuine gift would be documented. A family guarantee creates obligations for the guarantor; obtain advice about the risks before using family property as security.
Questions to take to your mortgage assessment
Bring a written outline of the proposed purchase and ask for answers relevant to your circumstances:
- Which part of my deposit must come from my own savings, and which other sources can you accept?
- If I borrow the shortfall, what happens to the mortgage amount and combined repayments?
- What evidence would you need for gifts, rental history, existing savings and the proposed personal loan?
- How much cash must remain available for the contract payment, settlement costs and a contingency?
- What happens if the valuation is below the purchase price or my circumstances change?
Make a source-of-funds list showing the amount, owner, origin and availability date of each contribution. Keep statements supporting the transfers. CommBank's document list illustrates the need to substantiate assets and liabilities. Ask your own lender for its list; these questions do not establish eligibility.
Compare personal loans only after the purpose is checked
If both lenders accept the proposed structure, compare the personal loan on the amount and term actually required. Check your offered interest rate, upfront and ongoing fees, total repayments, and any early-repayment charge. Do not build the purchase plan around the lowest advertised rate.
Use the personal loan calculator to explore the extra repayment. A calculator result or comparison listing is not confirmation of deposit-purpose acceptance, genuine savings or mortgage approval. If no confirmed option is shown for this purpose, ask for a specific assessment rather than choosing an unrelated purpose.
Keep loan approval, access to funds and the contract deadline as separate checkpoints. Ask your conveyancer about contractual commitments before signing or paying a non-refundable amount.