In case you are planning on buying your dream house in Melbourne, the thought of saving for a deposit will probably haunt you. You might think of contacting a mortgage broker in Melbourne for no deposit home loan advice. After all, that’s what home loan brokers are there for!
What if under the right circumstances, you are able to acquire a no deposit home loan that permits you to take out a mortgage with no money savings. For many first-time homebuyers who do not have the necessary funds, a no deposit or low deposit home loan is an attractive option.
But ideally, no deposit home loans are no longer available in Australia and most lenders today will only accept those home loan applications where the borrower shows at least 5-10% of savings. Let us see what could be the solution to this ongoing agony.
Low Deposit Home Loans
These days, No Deposit Home Loans more likely come in the form of Low Deposit Home Loans, First- Time Home Deposit Schemes, or through Guarantor Home Loans. The reality is that most lenders do not genuinely offer true so-called ‘no deposit’ home loans. Though, many money lenders will offer what could be the next best thing — a 5% deposit on home loans, famously called Low Deposit Home Loans.
Low deposit home loans in Melbourne have become the gold ticket among first-home buyers. The main advantage is it offers an opportunity to purchase your own home sooner to people who are unable to save the large deposit.
Now, how exactly do you buy your house with these types of low deposit home loans? Read on to know everything in detail about the different options available.
Different Options for Low Deposit Home Loans
First Home Loan Deposit Scheme
As per the standard rule of thumb, if you are a first home buyer, the First Home Owners Grant (FHOG) would cover some part of the cost of buying a new home. So ideally, you need to arrange a 5% deposit to get a home loan without taking the tension to pay LMI fees.
This scheme was introduced to help low and middle-income Australian first-time home buyers purchase their dream property quicker by eliminating the cost of LMI. Saving peoples’ tens of thousands of dollars, this scheme has become quite popular. On the basis of the maximum regional price cap which comes under this Scheme, borrowers can easily save anywhere between $10,000 and $30,000 in LMI fees.
Guarantor Home Loans
Guarantor home loans have become quite a rage as they cost fairly less than standard home loans. To understand it simply, your guarantor who could generally be a parent, sibling or grandparent can assist you in buying a home. This type of home loan allows you to buy the house without a deposit as the guarantor will provide a guarantee for your home loan. The home property of the guarantor will act as additional collateral.
The general agenda behind this loan type is for you to launch yourself into the property market as soon as possible. Basically, 80% part of the home loan amount can be availed on the property you are buying and the rest of 20% from your guarantor’s property.
For the lender, the guarantor is like the “next line of defence” when you fail to make repayments. The guarantor can be exempted from any responsibility once the borrower pays his part of the loan.
Gifted Deposit Home Loans
Another interesting way to avoid the deposit savings requirement is to check with your parents if they can gift you the money. If they can do so, most banks will essentially permit you to borrow up to 95% of your house value without any genuine savings. Parents can gift their children the money that they have in their savings account through the sale of any asset like a car.
Also, the banks will ideally be asking you to give evidence that the money has been gifted. It should not be a loan that will have to be repaid. A formal letter signed by your parents will easily suffice as proof of gift. Sometimes lenders request additional necessities like requiring the funds from your gift to be transferred to your account before you apply for a home loan.
Lenders have always been very strict with their criteria regarding gifted deposits. They will only accept a gift that genuinely comes from your parents. Another interesting fact is that if other members in your family like your sibling, spouse, or grandparents provide you with a gift, it is can be permitted after looking at your case.
Many times, if someone else from your extended family, like your uncle, aunt or cousin wishes to gift you a deposit, the banks will first evaluate the closeness of your relationship with them. You can be asked to discuss and explain this special situation to the bank.
But if you plan to accept the gift from any of your colleagues or friends or any other third party, most banks will not accept it. Lenders usually prefer to avoid such cases as much as possible. When any third party except your immediate family member gets involved, then the chance of fraud becomes higher. Lenders believe that it is quite possible that the third person may not have gifted you the money for deposit purposes, but instead lent you the money.
Lending rules and requirements are constantly changing and hence it is vital for you to discuss your needs with an experienced mortgage finance broker. A mortgage broker in Melbourne should be hired to negotiate with the lenders to help you find an unbeatable deal.
Low deposit loans have become quite an attractive choice for a lot of borrowers who do not possess the funds required for a mortgage.
As you could see in the article, there are several ways to buy a home with almost no deposit. However, time and time again one must access his/her situation and decide wisely on the best low deposit home loan.
Do your research and partner with the best mortgage broker in Melbourne today.
Now, your dream home is just a few steps away!