No deposit home loan options

Any general questions you might have in regards to loans and finance.
CyrusJ0
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Joined: Thu Mar 14, 2019 7:12 pm

No deposit home loan options

Postby CyrusJ0 » Thu Mar 14, 2019 7:16 pm

Hello,

I’m looking to purchase a property in Walcha, near Tamworth. The house is currently listed at $900,000 but the problem is that I have spent all the money I had saved for the property to buy a new car. I talked with my friend who works in a bank, and she recommended that to contact you. Can you help me out with this?

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Otto Dargan
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Re: No deposit home loan options

Postby Otto Dargan » Thu Mar 14, 2019 7:27 pm

Hi Cyrus,

Welcome to the forums.

Most lenders require that you have at least a 5% deposit in genuine savings to apply for a home loan.

But you still have quite a few options to get a no deposit home loan. Here are a few that you can take:

Guarantor home loan: With a guarantor home loan, you can borrow up to 105% of the purchase price if your parents act as your guarantors who secure the loan on their property.

A gifted deposit home loan: Some lenders will allow you to borrow up to 95% of the property value with no genuine savings if your parents or someone else can gift you a deposit.

Personal loan as a deposit: Although not recommended, it is possible to use a personal loan as part of your deposit to buy a home. This option is only available if you are in a strong financial position.

Call us on 1300 889 743 or fill in our free assessment form and one our mortgage brokers will help you find the best option for you.

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
Home Loan Experts

CyrusJ0
Posts: 4
Joined: Thu Mar 14, 2019 7:12 pm

Re: No deposit home loan options

Postby CyrusJ0 » Thu Mar 14, 2019 7:45 pm

Hey,

That’s great! I don’t want my parents to feel any sort of pressure to help me. And I’m pretty sure that I’m not going with the personal loan as deposit! However, I believe that my parents would be willing to help me financially. After all, I bought the car to help them get around town. Anyway, can you tell me more about this, please? How do gifted deposit home loans work exactly?

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Otto Dargan
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Re: No deposit home loan options

Postby Otto Dargan » Thu Mar 14, 2019 8:38 pm

Hey Cyrus,

If you can get your parents to gift you the money for the deposit, banks can actually accept the sum as your deposit for the home loan.

However, banks usually require parents to provide evidence that the money is a gift and not a loan that needs to be repaid. A gift letter that is signed by your parents will suffice as proof of this with most lenders.

Also, note that some lenders may have additional requirements such as requiring the funds from the gift to be in your account before you apply.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

CyrusJ0
Posts: 4
Joined: Thu Mar 14, 2019 7:12 pm

Re: No deposit home loan options

Postby CyrusJ0 » Thu Mar 14, 2019 9:05 pm

Oh! Okay. Thanks for letting me know. If I can manage to get the 5% from my parents as a gift, is that all I need to pay to complete the purchase?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
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Re: No deposit home loan options

Postby Otto Dargan » Thu Mar 14, 2019 9:06 pm

Hey Cyrus,

If you’re borrowing more than 80% of the property value, you need to pay Lenders Mortgage Insurance (LMI).

You can use out LMI calculator to find out how much you could be paying in LMI!

The good news is that many lenders will allow you to capitalise the LMI. It means that you can add the cost of the LMI to the top of your loan, so the money doesn’t have to come out of your pocket upfront.

You simply pay off the mortgage insurance with your regular home loan repayments.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

CyrusJ0
Posts: 4
Joined: Thu Mar 14, 2019 7:12 pm

Re: No deposit home loan options

Postby CyrusJ0 » Thu Mar 14, 2019 9:25 pm

Oh! Okay! This gives me something to think about. I will reach out to you very soon.


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