No Deposit Loans

Although the days of borrowing 100% of the purchase price without any proof of savings are gone, there are still some ways to get a no deposit home loan.

4 Options if You Don’t Have the Required Deposit4 Options if You Don’t Have the Required Deposit

4 Options if You Don’t Have the Required Deposit

1. 105% Guarantor Loan

This type of loan is ideal for first home buyers who don’t have the required deposit. Parents or family members go guarantor and use the equity in their existing property. So in the scenario where mum and dad own their own home and have no debt, they could offer their home as security for the kids to borrow 100% (or sometimes more) to purchase their first home.

Benefits include:

No Lender’s Mortgage Insurance if the LVR is 80% or less.
Discounted interest rates available from some lenders.
You can consolidate some minor debts such as credit cards when you buy your home.
Once you have paid off part of your loan or your property has increased in value then you can apply to remove the guarantee.
Avoid potential higher costs by getting into the property market sooner.

2. No Genuine Savings Loan

The majority of Australian lenders require you to prove that you have saved a 5% deposit before they will approve your home loan. Banks in particular want to see genuine savings over 3 months or more – because they view this as evidence that you are financially responsible and are able to make repayments on your mortgage.

However there are some lenders who view a gift from parents, an inheritance, a windfall, sale of an asset or a work bonus as an acceptable deposit and will loan between 90 – 95% of the full purchase price. Rent can also be taken as genuine savings in some cases.

3. Property Equity

If you have another property and you have equity in this, you may be able to use this equity as a deposit. We can arrange a valuation for you to determine the amount of equity.

4. Superannuation

If you have money in your super, you could consider setting up a self managed super fund and purchasing an investment property, using the super funds as a deposit. However this is a complex strategy, and the rules are currently being reviewed by the government, so it’s a strategy that needs sound financial advice. We can help with this.