Can I get a home loan with only $5,000 deposit?

Any general questions you might have in regards to loans and finance.
Camdem
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Joined: Thu Sep 19, 2019 7:53 pm

Can I get a home loan with only $5,000 deposit?

Postby Camdem » Thu Sep 19, 2019 8:18 pm

What are the possibilities of getting a home loan with only a $5,000 deposit? I earn $65,000 annually and have good credit. The reason why my deposit is so low is that I just. I am currently paying $850 p/w on rent at Gold Coast and hope to buy a property there which is valued at around $450,000.

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Otto Dargan
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Re: Can I get a home loan with only $5,000 deposit?

Postby Otto Dargan » Thu Sep 19, 2019 8:37 pm

Hello Camden. Welcome to the forums.

Thank you for reaching out to us.

As a general rule, a minimum of at least 5% of the property value is needed as a deposit as well as additional funds to cover the purchasing costs like stamp duty, conveyancing, etc.

Unfortunately, a $5,000 deposit is not enough deposit for a property worth $450,000. A minimum of at least $22,500 is required.

There are some easy strategies you can use to save for a larger deposit for your home loan:
  • Set up savings short, medium and long term goals and review your progress.
  • Take a close look into your income and expenses and know where you can cut down on your expenses.
  • Start off by saving small and progressively saving more and more each week or month.
If you are not able to save money on your own, then you can take the help of your parents and take out a guarantor home loan or asking them for a gifted home loan.

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

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

Camdem
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Joined: Thu Sep 19, 2019 7:53 pm

Re: Can I get a home loan with only $5,000 deposit?

Postby Camdem » Thu Sep 19, 2019 8:41 pm

Thanks for the options. Unfortunately, I don’t think my parents can help me as they are already paying a mortgage on their loan. Or can they still help me?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
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Re: Can I get a home loan with only $5,000 deposit?

Postby Otto Dargan » Thu Sep 19, 2019 8:51 pm

Hi Camden,

Your parents might still be able to help you if they have enough equity remaining on their home loan. Some lenders will allow your parents to secure a guarantee on their property with a second mortgage.

Lenders will look into the total debt secured on your parents’ property to calculate how if they have enough equity in their property. Generally, their current home loan and the new limited guarantee must be less than 80% of the property value.

For example, if your parents have a home loan with $150,000 owing and they have agreed to provide you a limited guarantee of $100,000, then the total debt secured on their property is $250,000. Their property must be worth above $250,000 for the guarantor loan to be approved.

Furthermore, your parents should not apply to be a guarantee when they already have a home loan unless:
  • The consent for the second mortgage is granted.
  • A bank valuation is performed on your parents’ property.
  • The lender has issued formal approval.
You can use our guarantor loan calculator for more information.

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

Camdem
Posts: 3
Joined: Thu Sep 19, 2019 7:53 pm

Re: Can I get a home loan with only $5,000 deposit?

Postby Camdem » Thu Sep 19, 2019 9:04 pm

Besides having sufficient equity, what factors do lenders look into so my parents can qualify to be a guarantor?

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Otto Dargan
Mortgage Specialist
Posts: 7728
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get a home loan with only $5,000 deposit?

Postby Otto Dargan » Thu Sep 19, 2019 9:21 pm

Hi Camden,

These are the factors lenders will look into when you have a guarantor on your home loan:

Your parents should have a stable income and good credit history so lenders are assured that they can make repayments on the mortgage.
The guarantor’s property must be in Australia.

The guarantor must be an Australian citizen or permanent resident, but some lenders accept overseas guarantor.

The age of the guarantor must be above 18 years old and typically under 65 years old. Retired guarantors are accepted, but this is looked into on a case by case basis.

We are mortgage brokers who specialise in guarantor supported home loans. Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan with a guarantor.

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


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