No deposit to buy a house
No deposit to buy a house
Hi there guys, I am thinking about buying a house but not sure if I have enough money for the deposit. I know that we are usually required to put down about 5 to 10 percentage of the property value as a deposit. Could I possibly get my loan approved without a deposit? Are there any banks that allow this?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: No deposit to buy a house
Hi and welcome to the forums moodyjack,
There are some possible options available for you to borrow and get approved for a no deposit home loan. These possible options are:
Cheers,
Otto
There are some possible options available for you to borrow and get approved for a no deposit home loan. These possible options are:
- Applying for a guarantor loan: With this loan you can borrow up to 105% of the purchase price and you don’t need any savings.
- Using a gift: If you have received money as a gift from your parents and if it makes up for around 5% to 15% of the purchase price then this may be seen as non-genuine savings. You may be able to borrow up to 95% of the property value with a gifted deposit.
- Equity in another property: If you already own another property then you can use the existing equity in your current property as a deposit.
- Superannuation: You can use your superannuation to set up a self-managed superannuation fund (SMSF) and buy the property if you have over $100,000 in superannuation. You may be able to borrow 80% of the purchase price however the property must be an investment and not your home.
- Vendor finance: If you have a small 3% to 5% deposit and have trouble qualifying for a bank loan due to problem with your credit history and not being able to find a guarantor then you can use vendor finance. Since vendor finance can be very expensive this should only be used as a last resort option.
Cheers,
Otto
Re: No deposit to buy a house
Well, what do banks usually look at when they lend to someone without a deposit?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: No deposit to buy a house
Hi moodyjack,
Lenders tend to have very strict credit guidelines when assessing a no deposit home loan application. The things they look at are:
Cheers,
Otto
Lenders tend to have very strict credit guidelines when assessing a no deposit home loan application. The things they look at are:
- Credit history: You must have a perfect credit history especially if LMI approval is required for the loan.
- Repayment history: All of your current debts such as credit cards, personal loans and rent must be paid on time.
- Location restrictions: Most other lenders are very strict about the location that you are buying in. You must be buying in a major town, capital city or regional centre however one of our lenders is willing to consider anywhere in Australia.
- Property type: You must be buying a standard type of property such as a house, townhouse, unit or vacant land. If you a good income then you may be able to receive loans for duplexes, inner-city apartments, studios, bedsitters and even company title units. It is better if you speak to us to know if this is possible or not.
- Stable employment: You should have a stable and ongoing employment.
- Income: Your income must be high enough that you can easily service the loan. You cannot borrow to your limit with a high LVR mortgage.
- Professionals: Professionals such as an accountant, lawyer, doctor, vet, nurse, government employee or a teacher may find it easier to get a loan as these professions are known to be a low risk borrower.
Cheers,
Otto
Re: No deposit to buy a house
I will just give you a call since I am not sure if I meet these guidelines or not. Speak to you in a few days, bye!
Re: No deposit to buy a house
Hi there, I was also thinking about buying a house without a deposit. I read through the options and I would like to know more about the guarantor loan. Can you tell how this works exactly?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: No deposit to buy a house
Hi afish,
The way this loan works is that the guarantor will secure your loan against their own property. In most cases it will be your parents who would provide a guarantee on your loan since most lenders only allow the parents to act as a guarantor. Some lenders do allow immediate family members such as siblings, grandparents, spouses, partners or adult children however you would need to meet additional criteria to qualify for a home loan.
As a borrower of the guarantor loan, you have the following benefits:
Otto
The way this loan works is that the guarantor will secure your loan against their own property. In most cases it will be your parents who would provide a guarantee on your loan since most lenders only allow the parents to act as a guarantor. Some lenders do allow immediate family members such as siblings, grandparents, spouses, partners or adult children however you would need to meet additional criteria to qualify for a home loan.
As a borrower of the guarantor loan, you have the following benefits:
- No need for a deposit.
- No need to pay the LMI premium.
- Discounted interest rates provided by some lenders.
- Consolidation of some minor debts such as credit cards when buying a home.
- The size of the guarantee limited.
Otto
Re: No deposit to buy a house
I will contact you in a few days after speaking to my father. Thanks for sharing this info.