Low Deposit Home Loans

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.