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No Deposit Home Loans

Low or No deposit deposit home loans have received a lot of publicity in recent times as many banks and lenders have reviewed current lending criteria in line with a requirement for increased home loan deposit amounts. One of the common misconceptions that has come about as a result, is that borrowers are restricted to a 90% LVR (loan to value ratio) and would therefore require a 10% deposit. This is not the case with all lenders and, if you know who to talk to, there are still some banks and lenders who will lend up to 95% and the remaining 5% deposit can take various formats.

If you have good cash flow (a good income) but low equity (low or no deposit), there are still a few options that allow you to get a home loan with little genuine savings of your own. They key to finding the right home loan for you, based on your current deposit situation, really comes down to knowing which bank or secure lender provides a home loan solution that can cater to your particular situation.

The current economic climate has meant that genuine no deposit home loans that allow you to borrow 100% of the property purchase costs are now unavailable.

Guarantors

Many families are now looking at the strategy of using a guarantor as a means of obtaining a 100% home loan. In the instance where friends or parents are able to act as a guarantor, no deposit home loans Australia they must have an income as part of the lending criteria.

Options, Information and Help

Find out which realestate.com.au Home Loans panel lenders offer low or no deposit home loans that allow you to borrow up to 95% of the property value and get a mortgage broker to help you negotiate a better home loan package. Simply email us the form on this and we will return your contact within 2 business hours.

Assessment Criteria

The assessment criteria on low and no deposit home loans are stricter and will often incur a higher interest rate than other home loan options. These criteria require that you provide proof of a good income, strong employment history and may also include postcode restrictions on the areas where you can purchase the property. To work out what assessment criteria apply to you.

Advantages and Disadvantages

No Deposit Homes Loans in Australia, catching on!

Why are no deposit home loans in Australia becoming more common lately? Despite the recent downturn, house prices and interest rates had remained so high for so long that average people were being squeezed out of the first home market. They were fighting a never ending battle in trying to keep up with the soaring costs of housing. Every time house prices jumped just one percent it meant that a half million dollar home was costing $5,000 more.

Of course prices often rise well in excess of one percent and in the case of a 10% rise the cost of the same property would have risen an additional $50,000. A rise of $50,000 means the buyer needs another five thousand in deposit monies and often another 5 years on the loan term. Then on top of that in recent years interest rates have also been creeping ever upwards adding an equivalent extra burden.

It simply means that the overall cost of getting an Australia home loan far outstripped any increase in wages during the same period. The net result being that housing affordability declined rapidly. While people tried to save for a deposit the houses would go up by an amount in excess of those savings. Ironically then the longer people saved for a home the further behind they got.

These simple facts then indicate just why no deposit home loans are even more desirable now. They may well represent the only practical method of securing a first home for the majority of people. At least with a no deposit loan the intending buyer only has to come up with the ancillary costs and those are bad enough. You’ll still need legal fees and stamp duty.

Because there is no deposit you will also be likely to be paying thousands of additional dollars in mortgage insurance for the privilege. No deposit home loans Australia. Mortgage insurance is an insidious cost that banks impose. It’s a disgrace that you are forced to take out insurance on yourself against yourself. Surely the banks are the ones who should carry and pay for the insurance.

It gets even more ridiculous when you consider that should you default the insurance company will actually pursue you for any shortfall despite the fact that you are “insured”.

Getting a no money down loan used to only be possible by using the existing equity locked inside another home or property that you own. Typically so long as you had at least twenty per cent of the value of the property you are buying inside another property’s equity, then you would avoid mortgage insurance. Anything less than twenty per cent equity and you would pay mortgage insurance based on a sliding scale of the percentage of funds borrowed without security.

Because mortgages had become so competitive however, new players were bringing new and innovative financial products to the market to win some market share. One such product was the honeymoon rate loan and a normal evolution of that was the no deposit loan. All this aside and even with some extra costs the fact remains that a no deposit home loan in Australia still may represent your only viable option to a life time of renting.

We all know that renting represents a very real trap that keeps you locked inside a poverty cycle. A no deposit home loan in Australia is a way out of that insidious situation. With nothing less than your financial future at stake you owe it to yourself to look at all your options in securing a home. It’s not always easy to secure such an attractive deal, but we strongly recommend that you exhaust every avenue in trying to obtain a no deposit home loan in Australia.

Why are no deposit home loans in Australia becoming more common lately?

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