No deposit home loan
Have you been madly trying to save your mortgage deposit and feel like you are getting nowhere? If you want to get into the property market sooner rather than later, we may be able to help you with a low deposit home loan or a no deposit home loan.
This means your new home or investment property is well within your reach even without a deposit. Firstly, you are probably wondering why you need a deposit at all. Well, this is so lenders can determine how financially responsible you are before you become involved in a large, long-term debt. If you can put aside the money for a deposit while paying your living expenses, the lender has more confidence in you that the mortgage repayments will be made on time. Our home loan experts, through years of experience, can share some insights with you:
Guarantor home loan
One option that is available for a no deposit home loan is providing a guarantee from your parents or a friend, secured on their property. Within Australia, through a guarantor home loan is the only way that an individual can borrow 100-110% of the purchase price of the property. You can apply to have the guarantee removed as soon as your property has increased in value or part of the loan is paid off. Don’t worry if it sounds confusing; our home loan experts are here to guide you through the process.
Another method to acquire a no deposit home loan is to obtain the deposit through a personal loan. To qualify for a no deposit home loan through a personal loan, you must have little existing debt and a high income to afford both repayments, as you will be paying for both the mortgage and personal loan at the same time. You will also need a clear credit history and some savings to cover additional costs such as stamp duty.
Home equity loan
If you already are a property owner, we can assist you through using your existing equity on your property as a deposit. If this is sufficient, then you do not need any savings for a no deposit home loan.
To find out more on obtaining a home equity loan click here.
Low deposit home loan
The usual safety threshold for banks to lend money is 80% of the property value.
Do not let this put you off purchasing that dream home you find yourself always thinking about. If this figure is too great, then you can borrow more through a low deposit home loan, but you will incur a Lenders Mortgage Insurance fee. You do only need to pay this fee once, but it can add thousands. Lenders Mortgage Insurance is a safety net for the bank so they may allow you to borrow more than 80% of the house value.
There are criteria, however, that need to be met to borrow up to 95% of the purchase price. When evaluating your eligibility for a low deposit home loan, you must have a good credit history, a good employment history, genuine savings, good asset positions and controlled debt. We will assess your situation and find the best result for you.