Help! I don’t think I have enough deposits to apply for a home loan

Any general questions you might have in regards to loans and finance.
Byron
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Joined: Wed Jul 31, 2019 7:20 pm

Help! I don’t think I have enough deposits to apply for a home loan

Postby Byron » Wed Jul 31, 2019 7:21 pm

I have been working for the past 3 years but just can’t seem to increase my savings for a home loan. I have been looking around for a house at Toowoomba and most of them are listed at above $600,000.

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Otto Dargan
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Location: Sydney, Australia
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Re: Help! I don’t think I have enough deposits to apply for a home loan

Postby Otto Dargan » Wed Jul 31, 2019 7:52 pm

Hello Bryon. Welcome to the forums.

The first thing you’ll have to do is calculate the Loan to Value Ratio (LVR), which is the amount you are borrowing over the value of your property, represented as a percentage. For example, if there is a property valued at $600,000 and an applicant is looking for a loan amount of $550,000, then the LVR is 91.67%.
(550,000 ÷ 600,000) x 100 = 91.67%.

You can use our LVR calculator to assess your situation. If the LVR is above 80%, then lenders will consider this risky and you might need to pay[url]Lenders’ Mortgage Insurance (LMI)[/url] as well.

Most lenders will require a deposit of at least 5% of the property value as genuine savings to qualify for a mortgage. You have to provide strong evidence that you’re a good borrower.

Alternatively, you can use a guarantor to borrow up to 105% of the property value. The guarantor will provide a guarantee on your home loan which is secured on their property. A guarantor home loan can potentially save you tens of thousands of dollars in LMI.

If you’re a first home buyer, you might be eligible for the First Home Owners’ Grant and even be exempt from stamp duty concessions.

Talk to our specialists by calling 1300 889 743 or by completing our free assessment form today to see if you can apply for a low deposit home loan today.

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

Byron
Posts: 2
Joined: Wed Jul 31, 2019 7:20 pm

Re: Help! I don’t think I have enough deposits to apply for a home loan

Postby Byron » Wed Jul 31, 2019 7:59 pm

What are the ways I can provide evidence that I’m a good borrower?

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Otto Dargan
Mortgage Specialist
Posts: 7657
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Help! I don’t think I have enough deposits to apply for a home loan

Postby Otto Dargan » Wed Jul 31, 2019 8:14 pm

Hi Bryon,

Lenders have strict lending criteria for borrowers with low deposits, but if you meet the following criteria, you increase your chances of approval even with a low deposit:
  • Your income will be looked into carefully as this is the basis of their assessment of your capacity to make mortgage repayments.
  • There are restrictions on the property types and locations for low home deposit loan.
  • Ideally, you should have a clean credit file with no black marks on your credit history.
  • Even with low deposit loans, genuine savings is usually required, but there are lenders who will lend if you meet certain criteria for no genuine savings home loan.
  • Your age and income should reflect a relative level of assets like owning a car, jewellery, savings, etc.
  • Lenders like to see if you’re working full time with an employment history of at least 3 months in your current role or at least 2 years in the same line of work.
  • The general rule for borrowing at a high LVR is to ensure that any unsecured debt you have does not exceed more than 5% of the purchase price of the property. Depending on the lender and your deposit, showing a perfect repayment history of the debts can work in your favour. Try our borrowing power calculator to see how much lenders will allow you to borrow.

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


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