No deposit home loans are a lot harder to come by than they used to be, as banks now have stricter requirements due to the Global Financial Crisis. But there are still a couple of ways that lenders may allow you to borrow 100% of the purchase price of your property.
The easiest way may be to seek assistance from your parents to guarantee your home loan, provided they already own a property. If your parents agree to assist you, they become known as the guarantors under your home loan. A guarantor home loan means the bank holds the guarantor’s property as extra security if you default on your loan – with a level of reduced risk, the bank may be willing to grant you a loan without any proof of savings.
However, you need to consider whether your parents are in a position to provide security to your loan, and the added financial strain this could cause them. Guaranteeing a loan is a major commitment. Guarantors should always seek legal and financial advice before deciding to become a guarantor. The fact that you have no savings of your own means there is a greater risk you will not be able to pay back the loan, so you will usually pay a higher interest rate if you get a guarantor home loan.
Similarly, if you already own a home, but want to buy a second property for investment or holidays, you can use your existing property as security on a 100% home loan. Again, because the bank has a solid asset at their disposal minimising their own risk, they may grant you a loan without an additional deposit.
Low deposit home loans
There are also a range of low deposit home loan options for those who have a 5-10% deposit. A one off gift of cash from parents or an inheritance can be used towards the 5 -10% deposit. The deposit and information about your income and expenses amongst other things can show how well you can manage money to meet serviceability of a home loan.
The main benefit of no deposit home loans is that if you are able to use the guarantor option, you may not have to pay Lender’s Mortgage Insurance (LMI). LMI can be a significant cost associated with buying a home if you have a low deposit, so it’s useful to be able to save paying this if you can help it.
If you want to find out more about your options if you have little or no deposit for a home loan, you can visit one of Choice Home Loans’ mortgage brokers to find out more. A Choice Home Loans broker will be able to provide detailed advice on your situation, and present you with the best and most competitive product options. Make an enquiry online to speak to one of our knowledgeable and experienced mortgage brokers today.
Contact a Choice Home Loans broker
Find a broker
Use our broker services search tool to find brokers available in your area
This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the articles is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).