How to get a home loan without a big deposit.

Buying your first home is a major step in anyone’s lifetime. For many its the single most important purchase and is security for their future.  In this day and age it is a great accomplishment and brings freedom from dead rent, inspections and paying someone else’s mortgage.

The one major hurdle to this dream is the major deposit banks require in order to purchase that first home. Even though you have calculated that you could make the repayments coming up with a 20% deposit can seem like a daunting task and feel like it will take forever.

If you’re struggling to come up with a 20% deposit here are some other options you may want to consider.

 

First Home vs Dream Home.

If you already have a large amount of savings for your deposit however  it’s still not enough for the house or house and land package you are looking at, maybe consider a small or cheaper home.

Usually a first home is not someones forever home, families grow and lifestyles change.  If you don’t need 4 bedrooms now maybe consider a 3 bedroom home and so forth.

You need to determine what is more important to you at this stage. Is it entering the property market, or waiting until you have enough deposit? Holding off may mean property prices rise and may leave you further away from achieving your goal.

By purchasing a cheaper home, you may be able to get into the market sooner, take advantage of Government first home grant incentives and allow your home to grow in value. Eventually, you may be able to rent out the home or sell for a profit and use the funds to upgrade to your dream home.

 

Family pledge/guarantee.

A family pledge or guarantee has become a popular way for parents and or family members to help each other secure a home. If you have a family member who owns their home either outright or has equity available, they may be able to use a portion as security towards your home. 

This can allow you to get a home loan with little to no upfront deposit. Which means instead of you only being able to borrow 80% of the purchase price and the need to provide a large deposit, with your parents or family members home as security you may be able to borrow up to 100% of your new home’s value.

Generally, family members who can guarantee your home loan can be parents, siblings, partners and grandparents.

 If you have more questions about Family guarantees contact us and will talk you through the process.

 

Borrowing with Lenders Mortgage Insurance

Lenders’ Mortgage Insurance, or LMI, is insurance that protects the lender, not you. It’s usually a one-off payment made by the borrower at the time of loan settlement. Here are the facts about LMI:

  • LMI is a type of insurance you can expect to pay if you borrow more than 80% of your home’s value.
  • LMI protects the lender – not the borrower.
  • You don’t need to arrange LMI yourself – your lender will sort it for you.
  • It’s possible to save on LMI by saving a bigger deposit.
  • LMI may range between $7,000 to $15,000 or more.

Some lenders will allow you to borrow between 95% – 98% of your new homes value. This means you may be able to purchase with only 2% – 5% deposit. However there are a number of conditions that you will need to meet and this is where LMI comes in.

The lenders will also want to make sure you have the capacity to repay the home loan. Without a strong savings history, they may require you to have a proven rental history with consistent repayments.

 

First Home Super Saver Scheme.

In 2017 the First Home Super Saver Scheme was introduced by the Australian Government. The FHSS scheme allows first home buyers to save money inside their superannuation fund. This can help buyers to save for a deposit faster.

With the FHSS scheme you can make voluntary contributions into your super of a maximum of $15,000 per year and up to a total of $30,000 contributions across all years. These funds can then be used towards your deposit when needed.

Find out more about the First Home Super Saver Scheme

 

Our Deposit Assistance Solution.

Our Deposit Assistance Solution is designed especially for home buyers with a low deposit. We make this possible by connecting our buyers with lenders who will lend up to 98% and using Government first home grants towards your deposit.

We provide deposit assistance as a gift to eligible home buyers to help cover additional expenses. This will allow you to get into your home sooner with less savings.

Helping buyers with a low deposit is what we do best. We provide a free service to make the journey simple. If you’re serious about buying a home, then we can provide you with a strategy that will enable you to do so.

 

Talk to us today!