Can I take out a home loan without any deposit?

Any general questions you might have in regards to loans and finance.
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anita
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Can I take out a home loan without any deposit?

Postby anita » Thu Oct 23, 2014 10:01 am

Hi!

I work for a company in Canberra and I am thinking of buying a house. Although I have a steady income (currently $48,000 p.a.), I do not have any significant savings. Can I get a home loan without a deposit?

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Otto Dargan
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Re: Can I take out a home loan without any deposit?

Postby Otto Dargan » Thu Oct 23, 2014 11:12 am

Hi anita,

The ways that you can borrow 100% of the property value have become extremely limited. However, no deposit home loans are not impossible per se. There are still several ways that you can buy a home without any deposit such as:
  • If your parents provide a guarantee secured on their equity of a property, then you may be able to borrow 105% of the purchase price. This would also cover any stamp duties associated with your purchase.
  • If your parents gift you about 5% to 15% of the purchase price, you may be able to get a 100% of the property value. Even though you haven’t saved the deposit on your own, lenders may still consider it as genuine savings. It is quite common for parents to help their children with the purchase of a property.
  • You can use your personal loan as a deposit for your home loan. However, you will need to have a high income, very little existing debt, very good credit history, and perhaps a little percentage of your own savings.
  • If you own a property before applying for a loan, then you may be able to use your equity in the property as security for your new property purchase. In this way, you may not require any savings at all for the new purchase.
  • If you have more than $100,000 in superannuation, then you can set up a Self-Managed Super Fund (SMSF) and be able to get a home loan without any savings. That is because your deposit will be your superannuation itself.
There is also the option of vendor finance, however this is used as a last resort by people who have a bad credit history and cannot qualify for a standard loan. This is because buying a home with this method will cost you more in terms of the property price, as well as a higher interest rate.

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

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anita
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Re: Can I take out a home loan without any deposit?

Postby anita » Thu Oct 23, 2014 11:56 am

Thank you for taking the time to give such comprehensive response. Unfortunately, my parents are not in a position to help me with my home loan. It seems that I will require some savings on my part to make the process easier. Could you elaborate a bit on what genuine savings are?

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Otto Dargan
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Re: Can I take out a home loan without any deposit?

Postby Otto Dargan » Thu Oct 23, 2014 1:34 pm

Hi anita,

Genuine savings are the savings that you have made on your own income over time. Genuine savings can be the funds held in your own savings account, term deposits, shares you own, or funds you manage. These should have been with you for a period of three months or more. However, different lenders have different criteria on what qualifies as your genuine savings. If you have equity in a property, or have been renting, then some lenders may consider these as exceptions.

Different lenders have different standards on when a borrower needs to have genuine savings. If you are looking to borrow up to 80% of the property value, then you may not require any genuine savings. You can use our Genuine Savings Calculator to determine what qualifies as your genuine savings, as well as to find out how much genuine savings you will need to get a loan with our lenders.

If you need to find out more about your home loan application, you can talk to one of our mortgage brokers on 1300 889 743 or fill out our free assessment form.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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anita
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Re: Can I take out a home loan without any deposit?

Postby anita » Thu Oct 23, 2014 2:12 pm

I will definitely give you guys a call in a day or two. Thank you very much for the information.

moodyjack
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Re: Can I take out a home loan without any deposit?

Postby moodyjack » Fri Jan 16, 2015 12:11 pm

Hi,

I also want to get a home loan without any deposit. After looking for some information, I feel that getting a guarantor loan from my parents will be the best option for me. But there is a problem – the property of my parents is mortgaged in itself. Can we get a guarantor loan in this kind of situation?

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Otto Dargan
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Re: Can I take out a home loan without any deposit?

Postby Otto Dargan » Fri Jan 16, 2015 1:02 pm

Hi moodyjack,

Even if they already have a home loan, then also they may be able to be guarantors for your loan. If the total debt they owe, i.e. their current loan plus the guarantee amount they are committing on your loan, is less than 75% to 80% of the value of their property, then most lenders may be willing to give you a guarantor loan.

Essentially, the more equity they have on their property, the higher guarantee they can give. You can always try our Guarantor Loan Calculator to estimate how your specific situation will be viewed by different lenders.

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

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: Can I take out a home loan without any deposit?

Postby moodyjack » Fri Jan 16, 2015 1:45 pm

Thank you for the information. And that calculator seems really handy.


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