Low Deposit Home Loans

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Break Free Home Loans are a leading broker of low deposit home loans In Melbourne, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs.

We work closely with clients as trusted advisors and are accessible to clients when needed. Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges.Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Self-employed and having trouble proving your income? Maybe you’re a contractor or casual worker? Whatever your situation, we offer solutions for all types of clients’ income sources.

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What Is A Low Deposit Home Loan?

A low deposit home loan is a type of loan that allows you to borrow up to 95% of the purchase price of a property with a small deposit (5-15%). Low deposit home loans are available from a number of private lenders, but they typically come with higher interest rates and stricter eligibility criteria than standard home loans.

Sometimes you can secure similar rates to a standard home loan, or even other benefits such as offset account feature, extra repayments, and fixed interest rates. This will all depend on your situation, however, so it’s important to consult a professional for advice if you are considering taking on a low deposit cheapest home loan.

How Does A Low Deposit Home Actually Work?

Low deposit home loans work by allowing you to borrow a larger proportion of the property’s purchase price (usually 95-100%), and therefore require a smaller deposit. This can be beneficial if you don’t have enough saved for a standard home loan deposit (20%), or if you want to keep your savings in a higher interest-bearing account.

This also gives you a broader range of ways you can meet your minimum deposit, such as your superannuation, the First Home Owner Grants, and more.

It’s important to remember that just because you can borrowed a larger amount, it doesn’t mean that you should. You will still need to ensure that you can comfortably make the repayments on your loan, even if interest rates rise.

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How To Get Approved For Low Deposit Home Loans in Melbourne

Getting approved for a low deposit home loan can be tricky and will depend on your circumstances and financial situation. It’s worth speaking to someone who knows what they’re doing, like a mortgage broker, as they will be able to help you get approved.

Credit History

One of the things that lenders will look at when assessing your application is your credit history. If you have a good credit history, you’re more likely to get approved.

Reliable Income

Another thing that lenders will look at is whether you have a reliable income. They’ll want to see that you have a stable job and that you’re likely to be able to comfortably make the repayments on your loan, even if interest rates rise.

Stable Employment

Being able to keep a stable job is a good indicator for lenders that you’re going to be able to continue paying back your home loan, making you a less risky borrower.

Actual Savings

The actual dollar amount in your savings account is a good indicator of your financial pool health and ability to make a home loan repayment.

Property

If you currently own property, this can be used as equity when applying for a home loan. It also shows lenders that you’re capable of paying back home loans.

Available Deposit Options

Depending on your situation you may have different options available to use as your deposit. These can be savings, equity in property, a gifted deposit from family, the First Home Owner Grant, or even your superannuation.

Talk to a mortgage broker today to see how much you could borrow with a low deposit home loan.

How Much Can I Borrow?

Depending on the type of home loan you’re looking to secure there will be different amounts you can borrow.

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Low Deposit

While your typical home loan deposit is 20%, a low deposit home loan will usually allow you to borrow up to 95% of the value of the property. Some lenders will even let you borrow up to 97% of the loan, depending on your circumstances.

Usually, low deposit home loans are usually given for deposits of 3%, 5%, 10%, and 15%. These are considered high-risk loans and come with several strings attached, but you will be able to borrow more than you would with a typical home loan.

If you’re seeking the lowest deposit home loan, our team can help you work out what that number is, based on your unique personal and financial circumstances.

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No Deposit

If you have no deposit, you may be able to apply for a no deposit loan. This could look like tapping into other sources of money, such as family members, or asking your parents or others to be a guarantor.

You will need meet the conditions that different lenders may impose for no deposit home loans, but a mortgage broker will be able to help you here.

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What You Should Know About Low Deposit Mortgages

A low deposit mortgage is a type of home loan that allows you to finance a property purchase with a smaller down payment than what is typically required. Low deposit mortgages typically require borrowers to have lenders’ mortgage insurance (LMI), which protects the lender in the event that you default on your loan.

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Low Deposit Premium (LDP)

A Low Deposit Premium, or LDP, is a one-time fee that is charged in addition to the Low Deposit Home Loan. The LDP is a fee charged by the lender and is generally around 0.5-1% of the loan amount. It’s non-refundable and non-transferrable and designed to reflect the risk associated with the loan. Its entire purpose is to protect the lender against losses and ensure the loan isn’t entirely a loss.

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All Fees Are Capitalised

Most lenders will require that all fees and charges are added to your loan amount, meaning you’ll be paying interest on them. This is called ‘capitalisation’. So, if you have a $400,000 loan and the lender charges a $2000 establishment fee which is added to your loan, you will actually be borrowing $402,000 from the outset. You’ll pay interest on this entire amount, as well as any additional interest that is added to the loan over time. For example, if you cannot make payments on your loan for a time and $10,000 is accrued in interest, that amount is added to your loan’s total. This means that next time, the interest added will be a percentage of (your loan amount + $10,000).

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Property Share

With a Low Deposit Home Loan, you may be able to purchase a property with another person who is also looking for finance, such as family or friends. This means that both of your incomes will be considered when assessing your loan application, giving you a better chance of securing finance.

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Guarantor Support

Another option is to find a guarantor, another party who will agree to support your loan repayments and loan collateral. A guarantor is a person, such as a family member, who can assist you in obtaining a home loan by agreeing to put their own home as additional security for your loan.

This option can be useful if you have bad credit, are considered a high-risk borrower, or simply don’t have the funds to put down a full deposit. It may help you to secure finance when you otherwise would not be able to.

About Low Deposit Home Loans For First Home Buyers

If you’re a first home buyer, a low deposit loan may be exactly what you need to enter the property market. As a first home buyer, you may be able to take advantage of the government’s First Home Owner Grant. The scheme allows eligible first home buyers to purchase a property with a deposit as low as 5% (subject to lenders’ criteria) and potentially avoid paying Lenders Mortgage Insurance.

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Choosing A Lender For Home Loans With Low Deposit

Finding the right lender for small deposit home loans or private home loans with low deposit in Melbourne can be difficult. It’s important to compare your options and find a loan that suits your individual needs. At Break Free Home Loans, we can help you compare a range of low deposit loans from different lenders, so you can find the right loan and lender for your needs.

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Applicable Fees And Taxes in Melbourne

When buying a property in Melbourne, there are a number of fees and taxes that you need to be aware of. These include stamp duty, which is a tax levied on the purchase price of a property, as well as other costs like conveyancing fees and loan application fees. Of course, fees will vary depending on the type of loan you choose.

There are also variable and fixed interest rates to consider, with both affecting the long-term results of your loan and your ability to pay it back.

At Break Free Home and Commercial Loans in Melbourne, we can help you compare low deposit home loans in Melbourne to ensure you’re getting the best long-term loan options. Discuss your needs with a qualified home loans expert today.

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Home Loans Low Deposit Calculator

If you’re looking for an estimate of what you can expect from a low deposit home loan, try our Low Deposit Home Loan Calculator.

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Do You Have Questions? We Are Ready to Answer

Still got questions? Our team is here to provide all the answers. We can help you compare loans, interest lowest home loans rates and features from a range of different lenders.

Get in touch with us today to discuss your needs. We’re here to help you find the best Low Deposit Home Loan for you!

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Frequently Asked Questions

What Is A Low Deposit Home Loan?

A low deposit home loan is a mortgage that can be approved with a deposit of 20% or less. Low deposit loans are available from a range of lenders, including major banks and specialist lenders.

What Are The Benefits Of A Low Deposit Home Loan?

The main benefit of a low deposit home loan is that it can help you buy a property sooner than you may otherwise be able to.

What Are The Drawbacks Of A Low Deposit Home Loan?

One potential drawback of a low deposit home loan is that you may end up paying more interest over the life of the loan. This is because lenders often charge higher interest rates on loans with smaller deposits. Additionally, your monthly repayments may be higher if you have a shorter loan term.

What Are The Benefits Of A Low Deposit Home Loan?

There are a number of benefits to taking out a low deposit home loan. Firstly, it can make buying a property more affordable. Secondly, you may not need to pay for Lenders Mortgage Insurance (LMI). This can save you thousands of dollars. Finally, some lenders offer special deals and incentives for low deposit borrowers.

How To Choose A Lender For A Low Deposit Home Loan?

There are a few different ways to choose a lender for a Low Deposit Home Loan. The first is to speak to a mortgage broker. A mortgage broker can help you compare home loans from a range of different lenders. They can also give you expert advice on which loan is right for you.

Another way to choose a lender is to do your own research. This involves comparing home loans online and reading customer reviews. Once you have found a few lenders that offer Low Deposit Home Loans, you can then contact them directly to discuss your options.

When choosing a lender for a Low Deposit Home Loan, it’s important to compare interest rates, fees and features. It’s also important to make sure that the loan suits your financial needs and goals.

How Can I Get A Low Deposit Home Loan?

The only way to get a Low Deposit Home Loan is to put down a smaller deposit than usual. This could be 5% of the purchase price, 10% or even 20%. You will then need to take out Lenders Mortgage Insurance (LMI), which protects the lender if you default on your loan.

How To Get Approved For Low Deposit Home Loans in Melbourne?

The approval process is different for every lender, especially if you’re trying to secure a low deposit home loan. Our brokers can help you understand what you need to do to get approved. We have a wide range of lenders on our panel, so we can help you find the right one for your needs.

If you’re ready to start looking for Low Deposit Home Loans in Melbourne, contact us today. Our experienced mortgage brokers can help you find the right loan for your needs and guide you through the approval process.

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We love to hear from each and every one of you. Please feel free to reach out to us today!

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1800 300 777

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info@breakfreehomeloans.com.au