With no deposit loans, you can buy a house without a down payment. The most common types of no deposit loans are 100 percent loans and 106% loans. With a 100 percent loan, you can borrow an amount equal to the full value of a property. With a 106 percent home loan, you can borrow the full value of the property in addition to an amount that covers mortgage insurance, legal fees and stamp duty. There are also low deposit home loans available from certain lenders. With a low deposit loan, you might get financing for between 95 to 97 percent of the property value. The amount you can borrow is generally between $300,000 and $485,000, and you must live in the home you purchase.
Who Can Benefit From No Deposit Loans?
When you don’t have a down payment for a house, a no deposit loan will allow you to purchase a property. These loans are most popular with first-time home buyers, those who have recently divorced and young couples. They are also an option for those with limited incomes or who have money that’s presently tied up in other investments.
Can I Qualify For A No Deposit Home Loan?
If you have an excellent credit score, a guarantor with good credit, and you earn enough to make the repayments, you may qualify for a no deposit or low deposit loan. Most lenders require that you be financially stable and have significant savings. Your income must be strong and consistent, and you will need to demonstrate a solid work history. If you are self-employed, you might have trouble qualifying for this type of loan no matter how much you earn.
Are There Disadvantages Or Restrictions With No Deposit Loans?
Your interest rate will probably be higher than it would be if you had a deposit, but the terms of these loans vary from lender to lender. With a no deposit loan, you’ll probably be charged more for mortgage insurance and you may have to make higher monthly repayments. Interest rates will differ between lenders but may be capped, floating or fixed; it pays to shop around for the best possible offering. Some lenders require that the property be located in a certain area; other lenders will not grant loans if the property is presently vacant or is situated in a deteriorating neighbourhood. These loans are considered high-risk, so not all lenders offer them.
A home loan calculator will be beneficial in helping you formulate the repayments you are going to need to make to stay on top of the loan.