How can I get a home loan with little savings of my own?

Any general questions you might have in regards to loans and finance.
Mohican
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Joined: Tue Mar 27, 2018 1:55 pm

How can I get a home loan with little savings of my own?

Postby Mohican » Fri Jun 01, 2018 12:31 pm

Hi team,

It’s been a more than a year that I started working but I have very little saved up ($10,000 only) since I was paying off my student loans. I’m living rent-free with my parents till now but I want to get my own little place. FYI, I heard about you from a friend of mine and checked out your website. It says that there are ways we can get a home loan even without a deposit. Do you think I can too apply for a home loan?

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Otto Dargan
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Re: How can I get a home loan with little savings of my own?

Postby Otto Dargan » Fri Jun 01, 2018 1:44 pm

Hello Mohican. Welcome to the forum.

Yes, you can get a home loan without savings. You can get a guarantor loan if your parents are willing to pledge their security for your purchase.

Even though guarantor loans allow you to borrow all of the purchase price, many lenders still require you to have 5% of the purchase price in genuine savings.

The other benefits of going with a guarantor loan are as follows:
  • You are not required to pay Lender Mortgage Insurance (LMI) even if you borrow 100%. For normal loans, lenders will charge you LMI to protect themselves from loss for loans of more than 80% of the property value.
  • You also have the ability to borrow up to 105% which can cover your other expenses like stamp duty so you don’t have to use any of your savings.
  • You can consolidate any debts that you may already have as long as the loan amount is less than 110%.
The other way is to get a gift from your parents or your relatives. Most lenders require you to have 5% of the deposit saved in a bank account over three to six months as genuine savings, but if you have received a gift or an inheritance, you may be eligible to borrow 90 to 95% Loan To Value Ratio (LVR) with some of our lenders.

However, if you cannot cover the remaining amount, you can still save up for a while and apply again later.

There are a few lenders who don’t require this genuine savings requirement. You can enquire online or give us a call on 1300 889 743 if you want to know more.

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

Mohican
Posts: 6
Joined: Tue Mar 27, 2018 1:55 pm

Re: How can I get a home loan with little savings of my own?

Postby Mohican » Fri Jun 01, 2018 3:33 pm

Thanks Otto for the options. I spoke with my parents and they are willing to give me a guarantee for my home loan. They have an existing mortgage with AMP (loan amount remaining $200,000). Its estimated market value is around $500,000. Please can you tell me the next steps?

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Otto Dargan
Mortgage Specialist
Posts: 7021
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How can I get a home loan with little savings of my own?

Postby Otto Dargan » Fri Jun 01, 2018 6:04 pm

Hi Mohican,

You need to consider certain things when applying for a guarantor loan:
  • Relationship with guarantor – Most lenders can consider guarantees from immediate family members such as siblings, grandparents, spouses, de facto partners or adult children.
  • Guarantor’s property and liabilities - Most of our lenders will allow you to limit your guarantee. If your parents already have a mortgage, lenders will check that the total of their existing liability and the limited guarantee shouldn’t exceed 80% of their property value.
  • Guarantor’s employment history - Lenders prefer guarantors who are still working, however, there are a couple of lenders who accept retired guarantors as well.
  • Savings – Although you are borrowing 100% of the property value with a guarantor loan, most lenders will still need to see proof that you can save at least 5% in order to show them that you can make the repayments.
You can try our guarantor loan calculator to calculate the limited guarantee for your parents. This will let you work out the size of limited guarantee and let you know if you are likely to have trouble obtaining approval with some of our lenders.

Even if you do not meet above criteria, we may still be able to help you after assessing your application in more detail.

We can also be reached on 1300 889 743 or you can enquire online to contact us.

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

Mohican
Posts: 6
Joined: Tue Mar 27, 2018 1:55 pm

Re: How can I get a home loan with little savings of my own?

Postby Mohican » Fri Jun 01, 2018 10:09 pm

Great information. I am going to talk to my parents about this further and get back to you soon. Bye.


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