Most lenders have quite strict lending criteria for borrowers without a large deposit but, generally speaking, if you can meet the following requirements, you’ll have a good chance of getting approved:
- A good income with a reliable and long term job - Lenders generally like to see that you can meet your mortgage repayments without difficulty and you're working full time (although there are exceptions to this) with an employment history of at least 5 months in your current role or 2 years in the same line of work.
- Loan purpose and property - Unusual or specialised property types are riskier than standard properties. Also, loan purposes other than purchase, refinance or debt consolidation will be considered depending on the strength of your application.
- Clean credit history and low level of debt - This shows you're good with your money and depending on the lender and your deposit, showing a history of perfect repayments on these debts can work in your favour.
- Genuine savings - You need at least 5% of the purchase price in savings that you’ve accumulated over a period of 3 months, also known as 'genuine savings'. However, this isn’t a requirement for all lenders if you can meet certain criteria.
- Reasonable asset position - Your age and income should reflect a relative level of assets such as you owning a car, jewelery, having a savings and so on.
Cheers,
Otto