No deposit home loans
Why wait? Buy your home sooner rather than later with a ‘no deposit home loan’.
No Deposit Loans
‘No deposit loans’ are mortgages where you borrow 100% of the purchase price of the property. But does this still exist today? Since the global financial crisis, lenders today have been wary of funding these types of loans due to the higher levels of risk involved. Although 100% no deposit home loans don’t currently exist in the same way as before the GFC, it is still possible to get very close to a no deposit loan today!
Though there is no one quick fix to get a no deposit loan, a number of options are available that approximate the effect of a ‘no deposit loan’. Here they are:
- Through a 105% guarantor loan – This type of home loan will allow you to borrow 105% of the purchase price of the property. You don’t need to have savings or any deposit if your parents can provide a guarantee, which is secured on their property. This is actually the best way to buy a home without a deposit.
- A gift from parents worth 5% to 15% of the purchase price – If your parents can assist you in buying your own home, there are lenders who will consider your loan even if you didn’t save any for a deposit. Did you know that almost 60% of first homebuyers in Australia get help from their parents?
- Use your existing equity as a deposit – If you do have sufficient equity in a property already, then you might not need any cash savings at all to make another purchase.
- Use Lender’s Mortgage Insurance (LMI) to get a ‘high LVR’ loan.
- Some banks are now offering 95% LVR with the LMI premium ‘capped’. This effectively equates to a 97% LVR loan. Yes, 97% may be possible!
- Use your superannuation – If you have over $100,000 self-managed superannuation fund (SMSF), you can set that up to buy a property. With this, you can get a home loan without savings by using your superannuation as a deposit.
- Through vendor finance – This should be your last resort if you have a bad credit history and don’t have a guarantor.
If you would like to talk to a mortgage broker from 3Carrots to learn more about no deposit loans, please call 0434 390 688.