Having a 10% deposit will give you a great chance at mortgage approval but saving a little bit more to apply for a 15% deposit home loan is even better.
You may even for significant discounts including reduced interest rates and waived Lenders Mortgage Insurance (LMI).
These discounts combined can save you thousands of dollars over the life of the home loan.
How do I qualify for a 15% deposit home loan?
Since you’re borrowing more than 80% of the purchase price (80% Loan To Value Ratio or LVR), lenders will want to see you meet specific lending criteria:
- A good income: Basically, the bank wants to see that you have the means to make your mortgage repayments relative to the amount that you’re borrowing.
- A good asset position: The amount of assets you own should be in proportion to your level of income and how long you’ve been working. A low asset position raises questions about how well you manage your money.
- A credit file clear of black marks: Having a good credit history is a reflection of your character as a borrower. Having 6 month track record of paying your bills, credit cards, personal loans and other debts on time will mean you have a much better chance of getting approved.
- A good job history: Although an employment history of at least 6 months is required, some lenders can make exceptions if your situation is otherwise strong.
- A deposit that meets the genuine savings rule: With most lenders, at least 5% of your deposit must come from genuine savings. There are lenders that don’t have this requirement though.
These are just general guidelines for qualifying for a 15% deposit mortgage so please call one of our mortgage brokers on 1300 889 743 or complete our free assessment form and we’ll let you know how we can help you.
Can I get LMI waived?
Typically only offered to particular professionals, we may be able to help you avoid LMI, a premium normally charged by the bank when borrowing more than 80% of the property value.
LMI can be quite a significant cost and, worst of all, it’s designed to protect the bank, not you, in case you default on your mortgage.
To give you an accurate estimate of the cost, for a $561,000 loan on a property valued at $660,000 (85% LVR), your LMI premium could be almost $8,000, which you’ll have to pay upfront when you settle your home loan.
To qualify for waived LMI:
- The maximum amount you can borrow is $1.5 million at 85% LVR.
- You must have a clear credit file.
- All other aspects of your situation, including income and asset position, must be strong.
Our mortgage brokers are specialists at 15% deposit mortgages with no LMI so please call us on 1300 889 743 to discuss your situation with us today.
If you don’t qualify for waived LMI, don’t worry!
Your LMI premium will be significantly cheaper anyway because the LMI premium rate drops significantly once you have more than 10% as a deposit.
Do I need genuine savings?
What do you mean by genuine savings?
Genuine savings is a requirement that most lenders have.
In basic terms, it means that in order to qualify for a home loan, you’ll need to have at least 5% of the purchase price as savings that you’ve accrued over a period of 3 months.
There are other forms of genuine savings but luckily there are some lenders in Australia that don’t have this requirement at all.
This means your deposit can come from another source outside of your own savings, including a gift from your parents.
Many clients who call us only had a 10% deposit but by choosing a no genuine savings lender and asking the client if they could ask their parents for help, we were able to get them a great discount.
Is the 15% deposit all I need to complete the purchase?
Apart from the 15% deposit for the property, there are a few other costs that you’ll need in order to complete settlement.
These extra costs will bring the total amount you require to about 19% of the purchase price. The extra costs cover things like:
- LMI: Use our LMI calculator to find out which of the lenders on our panel with charge you the lowest premium.
- Stamp duty.
- Conveyancing fees.
- Home loan start-up costs.
There may be other fees charged so check out a complete guide here.
Keep in mind that if you’re a first home buyer, you may be eligible for the First Home Owners Grant and stamp duty waivers depending what state you live in.
First home buyers may also, in fact, qualify for the federal government’s new First Home Loan Deposit Scheme, allowing you to avoid paying any LMI fees at all.
Call us on 1300 889 743 or complete our free assessment form and we can tell you exactly how much you’ll need to buy a home with a 15% deposit.
What if I have bad credit?
Although you’ll generally need a solid credit history with a 15% deposit home loan, a specialist lender may accept your situation if you have a few defaults but an otherwise strong situation.
The bad credit home loans page will provide more specific approval criteria if you’re in a situation like this. Have a read and then simply complete this free assessment form and one of our bad credit specialists will get back to you within 24 hours.
In meantime, you may want to look at:
- Paying your bills and debts on time, every time for a period of 6 months.
- Paying off any small debts.
- Reducing your credit card limit to what you actually use.
Apply for a 15% deposit home loan today
Please call 1300 889 743 or fill in our free assessment form and one of our low deposit specialists can you let you know if you quality for a 15% deposit mortgage.
Significant home loan discounts are available from our panel of lenders including reduced interest rates and waived LMI so call us today!