Will the gift amount increase my chances of getting a home loan?

Any general questions you might have in regards to loans and finance.
Kimberly J
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Joined: Wed Aug 07, 2019 7:59 pm

Will the gift amount increase my chances of getting a home loan?

Postby Kimberly J » Wed Aug 07, 2019 8:03 pm

Looking to buy my first home and my parents graciously gifted me $50k. I am currently working but do not have enough savings. Will the gift amount increase my chances of getting a home loan?

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Otto Dargan
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Re: Will the gift amount increase my chances of getting a home loan?

Postby Otto Dargan » Wed Aug 07, 2019 8:10 pm

Hello Kimberly. Welcome to the forums.

A gift for a deposit from parents is one of the popular ways of avoiding genuine savings requirement.
With a gifted deposit home loan, you do not need to save a deposit or wait 3 months to show genuine savings.

To use the gift as a deposit:
  • Get your gift letter signed by your parents as proof.
  • Some lenders might require the funds from the gift to be in your account.
Some lenders even allow you to borrow up to 95% of property value with no genuine savings.

Lenders Mortgage Insurance (LMI) is typically charged if you are borrowing over 80% of property value.

Since this is your first home, you might be eligible for First Home Owners’ Grant FHOG.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a gifted deposit home loan.

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

Kimberly J
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Joined: Wed Aug 07, 2019 7:59 pm

Re: Will the gift amount increase my chances of getting a home loan?

Postby Kimberly J » Wed Aug 07, 2019 8:11 pm

Are there ways I can avoid paying LMI even when I’m borrowing over 80% of the property value?

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Otto Dargan
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Re: Will the gift amount increase my chances of getting a home loan?

Postby Otto Dargan » Wed Aug 07, 2019 8:30 pm

Hi Kimberly,

You usually need to pay Lenders Mortgage Insurance (LMI) if you borrow more than 80% of the property value. Paying LMI protects the lender in case you default on your loan. The more you borrow, the riskier it is for the lender, and the amount of LMI you’ll have to pay will be higher.

Here are some ways you avoid paying LMI:

  • The best to get to avoid paying LMI waived LMI and not having to pay LMI are different is to have a deposit of at least 20% of the property value.
  • Try to reduce your loan value ratio LVR, since a higher LVR means higher LMI premium. The Loan to Value Ratio (LVR) of your loan is the percentage of the property value that you’re borrowing. For example, if you borrow $950,000 against a property valued at $1 million, then your LVR will be 95%
  • Since the LVR is 95%, you will need to pay LMI, but you can save on this as well since different lenders offer different LMI premiums. You can use our LMI calculator to find out how much you can save on LMI.
  • Ask your parents to be guarantors on your home loan. You can borrow up to 105% of the property value and pay no LMI with a guarantor home loan.
However, the good news is that many lenders will allow you to capitalise LMI. This means that you can add the LMI premium to the top of your loan, and a single penny doesn’t have to come out of your pocket. Capitalising your LMI allows you to borrow with a smaller deposit.

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

Kimberly J
Posts: 3
Joined: Wed Aug 07, 2019 7:59 pm

Re: Will the gift amount increase my chances of getting a home loan?

Postby Kimberly J » Wed Aug 07, 2019 8:40 pm

I do not want to put more burden on my parents by making them guarantors since they’ve already provided a gift. How can I move forward with no guarantor?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Will the gift amount increase my chances of getting a home loan?

Postby Otto Dargan » Wed Aug 07, 2019 8:46 pm

Hi Kimberly,

Lenders will look into the following to check if you qualify for a home loan:

  • Your credit score to ensure there is no bad credit history, missed or late payments, instability of address or employment, etc. You can find out your credit score using our free credit score calculator.
  • Your borrowing power which looks into your income and expenditure to provide an accurate indication of how much you can afford to borrow. You can use our borrowing power calculator to discover your home loan borrowing power.
  • Your employment history like how long you’ve been working in the same industry, the duration of your employment, etc.
  • With a $50,000 deposit, you can purchase up to a $1million property or a $500,000 property with a 10% deposit. As first home buyers, you’ll likely qualify for stamp duty concessions or even the grant.

Still not sure if you'll be approved for your home loan? Call us on 1300 889 743 or enquire online today to find out!

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


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