How can I get a 100% home loan without deposit?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: How can I get a 100% home loan without deposit?

Post by Otto Dargan »

Hello homeowner and welcome to the forum.
One of the few ways through which you may be able to borrow the full amount of the property without any deposit is by getting a guarantor home loan. With a guarantor, you can borrow between 100% and 107% of the purchase price of the property and a few lenders don’t require you to have genuine savingsof your own.

How it works
The guarantors, usually your parents, provide a guarantee for the home loan which is secured on a portion of their property. A couple of lenders also accept family members and close relatives as guarantors.
Guarantor loans have the following benefits for you as a borrower:
  • You don’t need a deposit.
  • You don't need to pay an Lenders Mortgage Insurance (LMI) premium.
  • Some lenders may offer discounted interest rates.
  • It's possible to consolidate minor debts when you purchase the property.
  • You may be able to limit the size of the guarantee which reduces the risk to your parents.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How can I get a 100% home loan without deposit?

Post by Otto Dargan »

Hi homeowner,

Good question. Obviously, you do not want the guarantee to be in place for the entire term of the 30-year loan. You can apply to the bank to remove the guarantee when these conditions have been met:
  • You can afford the repayments without any assistance.
  • Your home loan is for less than 90% of the property value (ideally 80% or less).
  • You haven’t missed any payments in the last 6 months.
Our experience shows that most people are able to remove the guarantee somewhere between 2 and 5 years from the time loan has been set up, although this can vary significantly.

Many guarantees are set up because the borrower has no deposit so removing the guarantee most often depends on how much the property appreciates in value and how much in extra repayments the borrower can afford to make. You can still remove the guarantee if you owe more than 80% of the property value but you may have to pay LMI to achieve this.

We’ve got a comprehensive guide to guarantor loans, which describes everything from the types of guarantor loans available, to limit the size of the guarantee and even how to borrow up to 107% of the purchase price in order to consolidate debt!

If you’d like to speak to a mortgage broker who can help, please call 1300 889 743 or enquire online and one of our specialist brokers will contact you to discuss your situation.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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