Top home loan with no deposit and low deposit options
#1 Guarantor loans
A guarantor loan is offered by lenders to borrowers with insufficient deposit whose ability to repay a mortgage is not guaranteed. The guarantor acts as a third party who agrees to pay back the mortgage should the borrower default or becomes unable to pay.
A guarantor offers some of their own property equity as a guarantee on the borrower’s capacity to service the loan. They can be your parents, family, spouse, or anyone deemed eligible as per the lender’s criteria.
Read more: Your Parents Can Help You Secure Your First Home Loan — Here’s How
#2 Leveraging your equity from another property
If you already have a home and are planning to buy a second home, then buying house with no deposit nor savings is possible when you use the equity in your first home. This serves as a deposit for a new property purchase, effectively using your current property as collateral for the new loan.
This is known as an “equity loan” or “equity release.” It can be done by refinancing your current home loan or by taking out a separate loan, known as a “line of credit” or “home equity loan.” This allows you to borrow against the equity in your home.
#3 First Home Guarantee Scheme (formerly First Home Loan Deposit Scheme)
Okay so technically, this isn’t a complete no deposit scheme. But this government grant allows eligible first-home buyers to purchase a home with a deposit as low as 5% of the property’s value. The government provides a guarantee for the remaining deposit.
Eligible buyers can purchase a home without having to save a large deposit and pay for Lenders Mortgage Insurance.
The First Home Guarantee scheme is only available for new properties, and there are restrictions on the price of the property, which varies depending on the location of the property. There are also income limits for the scheme, so not all buyers will be eligible.
#4 Family Home Guarantee Scheme
Under the Family Home Guarantee Scheme, you can purchase an established or newly constructed (but not yet occupied) home with as little as a 2% deposit.
Eligible first home buyers are single parents with at least one dependent child. They must be earning less than $125,000 a year and not have any ownership in the time of application. Visit the NFHIC website for more information.
#5 Professional home loans
Some professionals are eligible for 90 LVR home loans including, but not limited to:
- Doctors
- Medical professionals
- Accountants
- Lawyers
- Financial planners
These professionals are considered low-risk borrowers by some lenders, and also have one of the lowest default rates. They can enjoy the perk of borrowing of up to 90% of the property price, likely without paying lenders’ mortgage insurance.
It is best to check with specific lenders to see if they offer no deposit home loans and if you meet their requirements. Alternatively, you can talk to a mortgage broker who has access to these types of lenders and get them to liaise with these lenders for you.
Can I use my super to buy a house?
It is possible to use your superannuation (retirement savings) to buy a house, but it is not a straightforward process.
One way to do this is through the First Home Super Saver Scheme (FHSSS). This allows eligible first-home buyers to withdraw voluntary contributions they have made to their super fund to use as a deposit for a first home. However, certain conditions apply, such as the requirement to live in the property for at least 6 months within the first 12 months of ownership.
Getting a loan for a home can be a struggle. Let ZEP help.
In conclusion, it is possible to get a home loan with no deposit, although it may be more challenging than obtaining a traditional home loan with a larger deposit.
If you’re having trouble finding the right loan, don’t hesitate to call our mortgage brokers! We have an outstanding range of lenders available, and we will help you with everything — from paperwork through to settlement.
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