Do banks accept personal loan instead of deposit for a mortgage?

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Zimmer
Posts: 9
Joined: Tue Mar 27, 2018 1:49 pm

Do banks accept personal loan instead of deposit for a mortgage?

Postby Zimmer » Mon Jun 11, 2018 12:44 pm

Hi Home Loan Experts.

We have been renting for a long time and now we want to buy a home of our own. But the rental payments is hindering us to save us more towards our purchase. Still, we have managed to save $15,000 and we’re looking to buy in the range of around $550,000 in the area that we’re living now in Kensington, Victoria.

We have a good credit history, stable employment and good income as well. Can we take a personal loan for the remaining deposit and continue with the planned purchase and a home loan? Hope to hear favourably from you soon.

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Otto Dargan
Mortgage Specialist
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Re: Do banks accept personal loan instead of deposit for a mortgage?

Postby Otto Dargan » Mon Jun 11, 2018 2:03 pm

Hi Zimmer. Welcome to the forums.

There are a few lenders who will allow you to take a personal loan in place of deposit and buy the property. That’s because most of the lenders would want you to have at 5% of the property price as genuine savings, i.e. your own savings.

Moreover, those lenders would want you to have:
  • A high income to afford both repayments.
  • Little existing debt (car loans, high credit card balances, etc.).
  • A clear credit history.
  • Some savings to make up any shortfall.
  • A proven rental history (preferred).
Also, you should be able to service both the personal loan and the home loan.

For this, we will first complete a basic assessment of your situation and recommend if there is another option available such as a guarantor loan or 95% home loan.

This parental loan arrangement will allow you to borrow up to 105% of the property value. A guarantor must either be your parents or a close relative and it works with the guarantor using the equity in their home as security for your home loan.

In this way, you can borrow with no deposit, avoid the cost of Lenders Mortgage Insurance (LMI).

If we determine that you are suitable for this type of finance and can afford the repayments, then we’ll organise a personal loan to fund your deposit.

Please enquire online or call us on 1300 889 743 and check if you qualify or not.

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

Zimmer
Posts: 9
Joined: Tue Mar 27, 2018 1:49 pm

Re: Do banks accept personal loan instead of deposit for a mortgage?

Postby Zimmer » Mon Jun 11, 2018 3:29 pm

I’m afraid we don’t have any guarantors available. We have discussed this and concluded that personal loan would be the best way to go. Instead, we can provide our rental statements, if it can be used. We always pay our rent on time, if it helps.

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

Re: Do banks accept personal loan instead of deposit for a mortgage?

Postby Otto Dargan » Mon Jun 11, 2018 7:57 pm

Hi Zimmer,

Even if you have a solid rental history, you still need a deposit. Some lenders will your rent as genuine savings,, i.e. evidence that you can put money on a regular basis, just like saving a deposit with regular deposits into a bank account.

In doing so, you can provide a deposit that hasn’t been saved by traditional means, like a gifted deposit.

You need to provide a rental ledger from a licensed real estate agent that shows you’ve been making your rental repayments in full and on time for at least 12, 6 or even three months.

Please contact us on 1300 889 743 or enquire online and we can discuss your options with you so you can make an informed decision as to how to apply for your loan.

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

Zimmer
Posts: 9
Joined: Tue Mar 27, 2018 1:49 pm

Re: Do banks accept personal loan instead of deposit for a mortgage?

Postby Zimmer » Mon Jun 11, 2018 8:34 pm

My sister could potentially gift me a deposit. I’ll talk to her about it. It would be great if I could avoid taking a personal loan. I’ll ring you guys afterwards. Cheers.


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