The role and guideline of the down payment in purchasing a home

First, let's check the basic role and guideline of the down payment.

The meaning and role of the down payment

The down payment in real estate purchases is a fixed percentage of your own funds when purchasing a house using a mortgage. Of course, the amount prepared as a down payment is not covered by the mortgage interest rate, so the higher the ratio, the lower the final principal and interest payment amount.

In addition, depending on the type of mortgage, interest rates may be reduced by preparing a down payment of a certain percentage or more like "Flat 35". Therefore, in many cases, a down payment of about 10 to 20% is prepared.

Average amount of down payment and standard ratio

The table below shows the average amount of down payment and home purchase announced in the "Flat 35 User Survey" (2019) by the Japan Housing Finance Agency. Average percentage of money.

Although there are some differences depending on the type of housing, it is clear that in most cases, a down payment of about 10 to 20% is prepared. increase.

As mentioned above, the down payment plays an important role. However, you can actually get a mortgage without a down payment.

Especially now that mortgage interest rates continue to be low, some people decide to purchase a home with a full loan. However, in the case of a full loan, the total payment amount and monthly repayment amount will be large, so it is necessary to make a more detailed repayment plan.

In general, the standard for a reasonable repayment plan is a "payback burden ratio" (percentage of annual repayment amount to annual income) of 25% or less. So let's calculate how much you can borrow by setting your monthly payment to 1/48th of your annual income.

Why it is difficult to buy a house with "zero savings"

As mentioned above, it is possible to buy a house with "zero down payment". However, it should be noted that "zero down payment = zero savings" does not mean.

Buying a home without savings can be difficult for a number of reasons. Here, we will divide the reasons why it is difficult to buy a home with zero savings into three categories.

Possibility of stricter home loan screening

In the home loan screening, various items such as the user's attributes and income status are checked. Compared to ordinary loans, the loan amount is large and the repayment period is long, so the examination is also strict.

Therefore, if you do not have any savings, it is possible that your repayment ability will be judged to be low, and the screening hurdles will be high.

I can't pay the deposit

The biggest reason why it is difficult to buy with zero savings is that you can't pay the "deposit" if you don't have your own funds. increase. A down payment is like a contract money that you pay when you sign a contract for the sale of a house.

In addition, since the deposit plays an important role in ensuring the reliability of the sales contract, the standard cost is as high as "5 to 10% of the purchase price". If you have zero savings, this deposit will be a big hurdle and you will not be able to proceed with the procedure.

In addition, if the purchase procedure goes smoothly, it is common for the deposit to be used as part of the purchase price.

It is difficult to prepare for various expenses and running costs

When purchasing a house, various fees and taxes are incurred as miscellaneous expenses. Many of them have to be paid in cash, so it is necessary to prepare your own funds in advance.

For expenses, you can borrow a "loan for expenses" separately from the home loan, but in addition to taking a separate fee, the interest rate is set higher than the home loan. Therefore, considering the repayment after purchase, it is safer to prepare in cash as much as possible.

Also, if you own a house, maintenance fees and taxes will be charged even after you acquire it. In order to continue repaying without difficulty, let's leave a certain amount of living expenses on hand in addition to the cost at the time of purchase.

How much cash should I keep on hand?

As explained so far, various expenses will be incurred when purchasing a house, so it is safe to know the approximate amount in advance. Let's take a look at the cost estimates.

Ratio of Estimated Expenses

Rate of Estimated Expenses is shown in the table below.

New detached house

Second-hand detached house: 6 to 9% of the property price

New condominium: 3-6% of property price

Second-hand apartment: 6-9% of property price

In order to pay the expenses in cash, you will need at least 1 to 3 million yen in funds, depending on the purchase price of the house.

Estimated amount of money to prepare

As an example, assume the case of purchasing a newly built house for 40 million yen, and simulate the estimated amount of own funds to prepare. Let's look at. First, for miscellaneous expenses, "40 million yen x 6 to 9% = 2.4 million to 3.6 million yen" is required.

Next, assuming that you prepare a 10% down payment, you will need 4 million yen of your own funds. Therefore, it can be calculated that it is necessary to prepare savings of 6.4 million to 7.6 million yen at least when purchasing a house.

Of course, in order to actually move in, you need to pay for "moving expenses" and "purchase of furniture and home appliances", and you want to prepare "living expenses for several months" for your new life.

A shortcut to your dream home! How to keep a household account book that you should know if you want to save money

Through the previous items, I explained the necessity of saving when purchasing a home. It goes without saying that buying a home requires a certain amount of money.

However, it's never easy to keep saving while paying the rent. The simplest way to save efficiently is to keep a household account book and review your spending.

Finally, I will introduce how to keep a household account book to promote savings efficiently.

Benefits of having a household account book

The benefits of having a household account book include not only being able to grasp income and expenditure, but also being able to reduce wasteful spending, as well as being able to predict the schedule. can be mentioned. Since the amount of funds required to purchase a home is large, it is difficult to achieve your goals without the cooperation of your spouse and family members.

If you clarify how much you can save through monthly income and expenditure, it should be easier to get cooperation naturally.

Expenditure Items and Model Cases in the Household Account Book

When keeping a household account book, it is important to understand the specific expense items and the ratio of the standard. Please refer to the main items and the approximate ratio for two couples in the table.

Of the above expenses, the more items and percentages you can save, the faster your savings will naturally be. First, take a look at your current household budget and see which expense items are spending most of your money.

Summary