Low Deposit Home Loan

WHAT IS A LOW DEPOSIT HOME LOAN

Most banks consider any deposit less than 20% a high risk. However, there are specialist lenders that allow you to borrow up to 95% of property value (subject to LMI). This means you can get a home loan with just 5% deposit.

CRITERIA FOR SMALL DEPOSIT LENDER:

A good income, capable to make mortgage repayment
Property, depending on restrictions and locations
Good credit file, no adverse credit history

Have genuine savings, 5% of purchase price accumulating over 3 months
Have assets that reflect your position commensurate to your income, age, etc.

Stable job, at least 6 months in your current role or 2 years in the same line of work
Low debt, less than 5% of purchase price

HOW DOES LOW DEPOSIT HOME LOAN WORK?

Most of Australian bank will limit the maximum amount they can lend to you, generally up to 95% of property value plus LMI. However, you will have to provide strong evidence to show lenders that you are a good borrower.

ARE THERE NO DEPOSIT HOME LOANS?

Yes! You can borrow 100% of property value plus extra cost of purchasing if your parents or close relative (having a good credit standing) act as guarantor on your home loan.

IS IT BETTER WITH BIGGER DEPOSIT?

With 20% deposit, you can fully avoid paying LMI giving you more negotiating power on your home loan. However, it would take longer for you to save that amount and in the meantime the property value might increase. As such, it would be a good idea to ask for advice from a mortgage broker.