No Deposit Home Loans

It is becoming increasingly harder to qualify for a first home loan. With property prices increasing substantially over the past few years, more people are struggling to save enough money for a deposit and to also pay purchase costs such as stamp duty. This is especially difficult for people who are also paying rent at the same time as saving the deposit.

There was once a time when it was possible to borrow 100% or even up to 106% of the purchase price of a property without offering another property as security. Once the Global Financial Crisis hit in 2008 those loans became no longer available.
So, what are my options to purchase a property and obtain a home loan without a deposit?

Guarantor Home Loan

If your parents own a property with sufficient equity in it, and they are happy to assist by acting as guarantors, then you may be able to purchase a property with little or no savings.

The benefits of this type of loan are:

You may be able to borrow the full purchase amount plus the money needed for stamp duty or any other associated costs.
You will avoid Lenders Mortgage Insurance (LMI), potentially saving you tens of thousands of dollars.
Since there is no LMI involved you may be eligible for cheaper interest rates at some lenders.
You can get into the property market sooner without the need to save a large deposit.

Equity In Another Property

If you are not a first home buyer and you already own a property then you may be able to use the equity in your current property to assist with purchasing another property. You just need to have sufficient equity (value of the property less the amount owing on the mortgage).

Please note that if you don’t have at least 5% of the purchase price in “genuine savings” when applying for a home loan then lenders will generally want to know where your income has been spent, if not saved. For example, lenders may want to see evidence of your rental history. Another example is that you may have had a personal loan or car loan on which you made significant extra repayments to pay it off quickly.