Low deposit home loans or high Loan to Value Ratio (LVR) home loans are a great way for borrowers to enter the property market and own their first home. Most lenders have strict lending criteria for borrowers with small deposits but generally speaking, if you can meet the following requirements, you’ll have a good chance of getting approved for a 5% deposit home loan:
- Good income: Lenders tend to be more strict when assessing your means of paying off a 5% deposit home loan, otherwise known as your ‘serviceability ratio’.
- Stable employment history: Although there are exceptions, lenders want to see you’ve been in the same job for at least the past 6 to 12 months.
- Clear credit history: Lenders prefer a clear credit file free of defaults and minimal enquiries (some exceptions).
- Strong asset position: Lenders will assess your income to asset position relative to your age. They like to see if you’ve been working for a few years that you’ll have a car and a decent amount of savings relative to your income.
- Little to no existing debt: Having more than one credit card and/or personal loans is a red flag for most lenders.
- Proof of 5% in genuine savings: Generally, consistent deposits into a savings account over a period of 3 months are considered genuine savings. There are some exceptions to this.
- Unusual property or location: Lenders prefer easily marketable properties as security located in prime locations. They are conservative when it comes to property located in high rise units and small or regional.
Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a low deposit home loan.
Cheers,