You don’t necessarily need to save a 20% deposit to buy a property!
Many banks and lenders are actually happy to approve a 10% deposit home loan as long as you meet all standard borrowing requirements.
We’re low deposit home loan specialists that know exactly how to build a strong case with these lenders.
Am I eligible for a 10% deposit home loan?
The eligibility criteria includes:
- Being in a stable job: Showing that you’ve been working in your current job for 6 months or in the same line of work for 2 years is a good indication to the bank that you can manage your repayments (not all lenders require this work history).
- Showing a positive credit file: Some will accept small paid utility defaults and other minor miss payments if your application is otherwise strong.
- Having minimal current debt: Showing a 6 month history of paying your bills, rent and credit cards on time will work in your favour when applying for a 10% deposit home loan.
- Having a strong income: You’ll need to meet the banks’ serviceability ratio, which is basically an assessment of your ability to continue to make home loan repayments.
- Holding 5% of the deposit as genuine savings: Most commonly, regular deposits into a savings account over a period of 3 months will meet the ‘genuine savings’ requirement that most lenders have. Despite this, there are no genuine savings home loans available if you meet certain requirements.
Simply complete our free assessment form or call us directly on 1300 889 743 and one of our low deposit specialists will let you know if you qualify.
A 1.10% interest rate discount is on offer!
If you can meet the following requirements, you may be eligible for a 1.10% interest rate discount.
Not only is this better than anything the banks are currently offering but it’s also a limited time offer so it’s better to act sooner rather than later.
- The discount is available on all purchases and refinances.
- You must have a history of at least 3 months in your current role or 2 years in the same line of work.
- The 1.10% discount only applies when borrowing more than $500,000 but, for loans between $250,000 and $500,000, there is a 1.00% interest rate discount available.
- Most lenders require you to have genuine savings but not all of them! Some will use your rental payment history in lieu of this requirement.
- The discount is also only applicable if you have at least a 10% deposit and you’re capitalising Lenders Mortgage Insurance (LMI) on to your mortgage. By capitalising or adding LMI on to your 10% deposit home loan, you’ll simply pay this premium off as part of your normal mortgage repayments, interest free, and avoid this cost upfront.
Is it possible to borrow more than $1 million?
Applying for a home loan with just a 10% deposit is considered to be a high LVR (Loan to Value Ratio) mortgage. In other words, it’s considered to be a high risk home loan.
It’s because of this that you’ll usually only be able to borrow up to $1 million. However, you may be able to borrow more than this if:
- You choose a bank that has a special agreement with their LMI provider that will allow borrowers with a 10% deposit to borrow up to $2,000,000.
- You already own a few properties that you can use as security for the mortgage.
Please speak to one of our 10% deposit home loan specialists, who can assess your situation and provide the right solution for you.
Waived LMI on a 10% deposit home loan
If you meet certain requirements, there are actually waived LMI solutions out there.
These requirements pertain to your profession. Doctors in particular are given preferential treatment by most lenders in Australia and can avoid LMI if they are qualified and registered with the Australian Medical Association:
- Other eligible specialists in the medical field include dentists, optometrists, veterinarians and pharmacists.
- The amount you can borrow is limited to $4.5 million.
- Qualifying with less than a 10% deposit is sometimes possible.
Don’t worry if you don’t qualify for waived LMI on a 10% deposit home loan though. You may be able to save thousands upfront if you qualify for capitalised LMI instead.
Alternatively, first home buyers may qualify for the government’s new initiative known as the First Home Loan Deposit Scheme which is slated to begin from January 2020.
Under this $500 million scheme, eligible first home buyers with low deposits do not have to pay LMI on their home loans as the government will guarantee a portion of their home loan (up to 15%).
Is a 10% deposit all I need?
Did you know that there are other costs to getting a home loan and buying a property that are not covered by your deposit?
Your 10% deposit works as a down payment on the property that you want to buy but, depending on what type of home loan you need, the property type and whether you’re a first home buyer or not, there are other costs which amount to around 3-5% of the property value, including:
- Home loan application fees (this includes application and settlement fees, as well as accounting fees, such as managing an offset account).
- Conveyancing or solicitors fees.
- Home building insurance.
- Stamp duty (this government fee is charged on both the mortgage and the property).
- Transfer of title costs.
Learn more about the extra costs of buying a home.
What is genuine savings and do I need it?
Even with 10% deposit, most lenders will require you to have saved at least 5% in a savings account that’s been accumulated as a result of regular deposits over a period of 3 months.
This is known as genuine savings, although, by clicking through to the link, you’ll find that other types of savings will meet this requirement.
In order to get a 10% deposit home loan, you can either save up 5% in genuine savings or you can go with a lender that doesn’t have this genuine savings requirement.
Our mortgage brokers are no genuine savings specialists so please call 1300 889 743 or complete this form to receive a free assessment within 24 hours.
Speak to a mortgage broker today
You don’t necessarily need a 20% deposit to buy a property!
There are 10% deposit home loan solutions out there and, with help from an experienced mortgage broker, you can even get a great deal.
Please call 1300 889 743 or complete our free assessment form to discuss your situation with us today.