Can I get a 100% home loan without any deposit?

Any general questions you might have in regards to loans and finance.
merrygoround
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Can I get a 100% home loan without any deposit?

Postby merrygoround » Tue Aug 19, 2014 6:59 am

Hello.

I’m a graphic designer living in Nelson Bay, NSW. I have an annual income of $50,000 and I’m thinking of purchasing a 2-bedroom house on Nelson Bay Road worth $388,000.

I want to borrow the entire $388k but I don’t have enough deposit. Is there a way to borrow the full amount without any deposit?

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Otto Dargan
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Re: Can I get a 100% home loan without any deposit?

Postby Otto Dargan » Tue Aug 19, 2014 8:18 am

Hello and welcome to the forums merrygoround.

One of the few ways through which you may be able to get a 100% LVR home loan without any deposit is by getting a guarantor home loan.

The guarantors, usually the parents, provide a guarantee for the home loan which is secured on a portion of their property. Family members and close relatives may also be accepted as guarantors by some lenders.

You may enjoy the following benefits by applying for a guarantor loan:
  • As mentioned earlier, you may not need a deposit.
  • You may not need to pay an LMI premium.
  • Some lenders may offer discounted interest rates.
  • It is possible to consolidate minor debts when you purchase the property.
  • You may be able to limit the size of the guarantee.
Cheers,
Otto
Otto Dargan
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merrygoround
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Re: Can I get a 100% home loan without any deposit?

Postby merrygoround » Tue Aug 19, 2014 6:59 pm

Thanks, Otto. Is there any chance that I can borrow more than 100% of the property value?

My parents already have a home loan of their own. Can they still provide a guarantee, or should I look for another guarantor?

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Otto Dargan
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Re: Can I get a 100% home loan without any deposit?

Postby Otto Dargan » Wed Aug 20, 2014 8:50 am

Hi merrygoround,

Another benefit of the guarantor home loan is that you may borrow more than 100% of the property value. The amount that you may be able to borrow depends on your situation. If you are:
  • A first home buyer - you may be able to borrow 105% of the property value.
  • Borrowing for construction purposes - you may be able to borrow 105% of the property value.
  • Consolidating debts - you may be able to borrow 110% of the property value.
  • Buying an investment property - you may be able to borrow 105% of the property value.
If you plan to use your loan for refinancing purposes then you may not be able to borrow more than 100% of the property value. It should be noted that although there is no maximum loan size, additional criteria may have to be met to borrow over $1 million.

Despite having a home loan, your parents may be the guarantors for your loan. However, they will need to have enough equity. You can use our Guarantor Home Loan Calculator as a guide for your loan application.

Lenders generally add the existing home loan to the new limited guarantee in order to work out if the guarantor has enough equity or not. If the total amount exceeds 75% or 80% of the value of the property then the guarantee may not be accepted.

Let us assume a guarantor has a home loan of $200,000 and the limited guarantee they need to provide is $200,000. Therefore they would have a total debt of $400,000 secured on their property. In order to get an approval on the guarantor loan, their property must be worth at least $534,000.

You can check out our website for more information regarding guarantor home loans. You can also call us directly on 1300 889 743. Our free assessment form can help you see if you qualify for a home loan or not.

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

merrygoround
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Joined: Wed Jun 24, 2009 3:46 pm

Re: Can I get a 100% home loan without any deposit?

Postby merrygoround » Wed Aug 20, 2014 5:37 pm

Thanks! That was really helpful.

Not only did the website help clarify my queries but it also helped me estimate a suitable loan amount. I will definitely call you in order to discuss how to proceed with my loan application.

moodyjack
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Re: Can I get a 100% home loan without any deposit?

Postby moodyjack » Wed Nov 19, 2014 8:17 am

Hi guys.

It has been over two years since I took a guarantor home loan. Everything had been going according to plan until my parents faced a financial crisis a few months back. I want to remove the guarantee on my home loan to relieve a bit of their stress. Am I allowed to do this?

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Otto Dargan
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Re: Can I get a 100% home loan without any deposit?

Postby Otto Dargan » Wed Nov 19, 2014 10:47 am

Hi moodyjack,

You may be allowed to remove the guarantee on your home loan. However, the application to remove the guarantee may only be made once the following conditions have been met:
  • You do not need any assistance to repay the loan.
  • Your loan has an LVR less than 80% or, 90% in some cases.
  • Your payments in the last six months have been on time.
In many cases, removing the guarantee depends on how much the property has appreciated in value and how much extra repayments the borrower can afford.

You can check out our guide to guarantor home loans or visit our website for more details.

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

moodyjack
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Joined: Wed Jun 17, 2009 4:36 pm

Re: Can I get a 100% home loan without any deposit?

Postby moodyjack » Thu Nov 20, 2014 5:21 pm

Thanks for the reply! I guess I’ll give you guys a call to further discuss this.


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