How do I get approved with a low deposit?

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Blaithin
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Joined: Tue Sep 03, 2019 8:33 pm

How do I get approved with a low deposit?

Postby Blaithin » Tue Sep 03, 2019 8:37 pm

Hi, Blaithin here!

I’m looking to buy a home asap. It’s a property that I really like but the problem is it's going off the market soon, and the vendor is willing to sell it at a lower price now. I don’t want t to see the property being sold to someone else. I don’t have a big deposit. So, how do I increase my chances of getting approved by a lender, even with a low deposit?

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Otto Dargan
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Re: How do I get approved with a low deposit?

Postby Otto Dargan » Tue Sep 03, 2019 8:52 pm

Hello Blaithin.

Welcome to the forums.

Most lenders have strict lending criteria for borrowers with low deposits, but if you meet the following requirements, you might have a good chance of getting approved.
  • The lenders will look into your income carefully as this forms the basis of your assessment to make mortgage repayments.
  • There are restrictions on property types and locations for a low deposit home loan.
  • You should have a clean credit history such as no late payments on personal loans, not paying credit cards, etc. (Some exceptions apply.
  • You must have accumulated genuine savings of at least 5% of the property value that you've accumulated over a period of 3 months. (Some exceptions apply)
  • Your age and income should reflect a relative level of assets like owning a car, savings, etc.
  • Lenders usually favour those with reliable and stable employment history of at least 5 months in your current role or 2 years in the same line of work.
Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a low deposit home loan.

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

Blaithin
Posts: 3
Joined: Tue Sep 03, 2019 8:33 pm

Re: How do I get approved with a low deposit?

Postby Blaithin » Wed Sep 04, 2019 12:33 pm

Thanks for the clarification. I’m sure I fulfil all the requirements, but I do have credit cards, some of which I don’t use. Would this complicate matters?

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Otto Dargan
Mortgage Specialist
Posts: 7725
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How do I get approved with a low deposit?

Postby Otto Dargan » Wed Sep 04, 2019 12:59 pm

Hi Blaithin,

It should not be an issue if you are making payments on time.

However, you might look into reducing your credit card limit or cancelling the credit cards so that you do not use to improve your borrowing power.
Using the borrowing power calculator, you could assess how the lender would view your application.

For instance, if you are earning $90,000 p.a with a credit limit of $10,000, then borrowing power would be around $9000, but if you reduce your credit limit to $5,000, then your monthly surplus income will increase to $9500.

You might want to look into bad credit home loans for more information on this.

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

Blaithin
Posts: 3
Joined: Tue Sep 03, 2019 8:33 pm

Re: How do I get approved with a low deposit?

Postby Blaithin » Wed Sep 04, 2019 2:44 pm

What are the interest rates like? Since this is a risky investment for the lender, I'm sure interest rates are higher for low deposit home loans?

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Otto Dargan
Mortgage Specialist
Posts: 7725
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How do I get approved with a low deposit?

Postby Otto Dargan » Wed Sep 04, 2019 3:05 pm

Hi Blaithin,

The size of the deposit is not the only factor that impacts the interest rate. A lot of it depends on your overall situation.

If you show a lender that you are a good borrower with employment stability, stable income and good asset position, etc. You may enjoy the same rates as borrowers with a higher deposit, you may even qualify for the same interest rate discounts. There are certain restrictions and requirement so please read our 95% home loan page.

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

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


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