Last Updated: 27th December, 2018

6 Ways To Borrow With No Deposit

Published by Otto Dargan on April 28, 2015

6 Ways To Borrow With No Deposit

Want to buy your own home but don’t have a deposit?

Don’t worry, you may still qualify for a home loan.

Here are 6 ways you can do it:

  • Guarantor loan: With a guarantor home loan, your parents agree to sign an agreement that the lender can sell your parents’ house to regain the money if you cannot repay your loan. With this agreement, you can borrow up to 110% of the purchase price. You can even pay off your personal debts!
  • A gift: You don’t even need to save a deposit yourself if your parents gift you 5% to 15% of the purchase price. Around 60% of first home buyers receive help from their parents when buying their first home so you’re not alone.
  • Use the equity from another property: If you own a property, then you can use it to purchase a new one. You can do this by agreeing with the lender that you will give up your current property if you can’t make your mortgage repayments.
  • Use a personal loan as a deposit: Did you know that you can take out a personal loan and use it as a deposit for a home loan? You need to have a good income for a lender to accept this kind of deposit. Only some lenders will let you do this.
  • Use your SMSF: You can set up a self-managed superannuation fund (SMSF) to buy a property if you have over $100,000 in superannuation. However, the property must be an investment property and not for owner-occupied use (a property that you’ll live in yourself).
  • Vendor finance: You can ask the seller of the property or an independent private investor to help you finance your deposit. To do this, you must have at least 2% of the purchase price as a deposit and be able to afford your loan repayments later. This option is not recommended because it can be very expensive so check whether you qualify for a standard loan with a bank first.

What if I can’t use any of these options?

If you can’t use any of the above options, here are some tips that will help you to qualify for a mortgage:

  • Save your cash: Cut down on unnecessary expenses and start making regular contributions to your savings account. If at least 5% of your deposit is made up of regular savings contributions, banks will accept this as genuine savings and you’ll be in a strong position to qualify for a home loan.
  • Don’t change jobs: Switching jobs just before applying for a home loan is like shooting yourself in the foot. Lenders look for stability in their borrowers and like to see that you’ve been in your job for some time, usually 2 years.
  • Pay your debts: Paying all of your bills, tax and loan repayments on time will improve your chances of getting your home loan approved. Try to pay off all unsecured debt as well, such as personal loans. You don’t have to pay it all off but the less you owe, the more amazing you’ll look in the eyes of the banks.

Not sure what to do?

Whether you’re in a position to qualify for a mortgage or you don’t think you’re quite there yet, call us on 1300 889 743 or complete our free assessment form.

One of our brokers will look into your situation, how much you want to borrow and tell you what home loan options are available to you.