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With property prices rising across most Australian suburbs, meeting the 20% deposit to crack the market can be difficult for most homebuyers.
Without sufficient deposit to get started, many Aussies consider applying for a low deposit home loan. Whether you’re an investor, homeowner, or a professional looking to buy an Australian property but don’t have enough deposit, our brokers can help you find a suitable solution.
Low Deposit Home Loans in a Nutshell
Low deposit home loans are equivalent to high Loan-to-Value Ratio (LVR) home loans because of the lower deposit required to qualify.
When you don’t have the 20% deposit required, you can still access flexible home loans by applying for a low deposit home loan and paying Lenders’ Mortgage Insurance (LMI).
Moreover, some banks and non-bank lenders in our panel offer 85% to 95% home loans for eligible borrowers. Contact our senior brokers at 1300 030 388, and we’ll discuss whether you qualify for a low deposit home loan.
First Home Guarantee Scheme Extended for 2023-24
First-time home buyers have access to the First Home Loan Deposit Scheme.
The National Housing Finance and Investment Corporation (NHFIC) announced the extension of the First Home Guarantee for 2023-2024. With that, about 35,000 slots are available for the period, allowing grantees to enter the property market with as little as 5% deposit.
According to the new guarantee adjustments:
- Applicants can jointly apply for First Home Guarantee
- Non-first-time home buyers who don’t own any property within 10 years can still apply.
- Permanent Australian residents can apply for First Home Guarantee, Regional First Home Guarantee, and Family Home Guarantee schemes.
First-time home buyers can leverage these government grants and make informed long-term loan decisions with a mortgage partner. Speak with our senior mortgage brokers to find out if you qualify.
Do I qualify for a low deposit home loan?
Since a high LVR exposes banks to a higher risk, they typically have strict lending criteria. But if you meet the following minimum requirements, you can get approved for low deposit home loans:
Reliable Income
Banks will thoroughly review your income streams as they are strong indicators of your financial capacity and ability to repay timely. Higher monthly income can make you eligible for better interest rates for your low deposit home loan.
Loan Purpose
Whether you’re applying to refinance your existing loan, purchase an investment property, or consolidate your debts will impact your application strength.
Type of Property
The property’s characteristics, such as location, size, zoning, and other factors, will determine whether you qualify for a low deposit home loan. That includes whether you’re buying near mining towns, a high-rise unit, or investing in a display home.
Credit History
A red flag in your credit history can hurt your low deposit home loan application. Remember, if you’re applying for a high-risk loan, you should maintain a clean credit file. However, some lenders in our panel have fewer restrictions for applicants who can provide at least a 10% deposit.
Genuine Savings
Most banks will consider low deposit home loan applicants if they have more than 5% of the property price in genuine savings. Genuine savings is money you have saved over time, determining your ability to manage finances and meet repayments.
Reasonable Assets
Some banks will evaluate whether you have a certain level of assets relevant to your career and age such as a car, savings, jewelery, etc. These are indirect indicators of your financial health, albeit not a primary factor for your loan approval.
Career and Job
Banks will see you as a strong borrower if you have a stable and sustainable long-term job. Your profession will also play a role since many lenders prefer medical professionals, lawyers, accountants, and other professionals due to their career demands and income potential.
Low Debt Level
Aside from a clean credit history, you can get better chances at getting approved for a low deposit home loan if your other loans and credit card debt doesn’t exceed 5% of the property value. However, having a perfect repayment history can still give you an advantage despite having considerable debt.
Frequently Asked Questions
Can I apply for low deposit home loans in any bank?
Not all banks offer low deposit home loans.
Moreover, there’s minimal difference between non-bank rates and those of major banks. Contact one of our senior mortgage brokers today, and we’ll let you know how we can help.
Can I get the lowest rates for a low deposit home loan?
Depending on your financial situation and occupation, you may qualify for exclusive rates with our lenders. Medical, legal, and accounting professionals have more chances of negotiating better rates since they are seen as low-risk borrowers.
Some banks offer 85% to 95% home loans with no LMI. Contact our senior mortgage specialists today to learn about high LVR home loans and LMI waivers.
Do low deposit loans have higher rates than other loans?
While your deposit amount affects the rate you’ll qualify for, getting approved for exclusive interest rates really boils down to your overall financial situation.
That means even if you can only provide a 5% loan deposit, our mortgage brokers can still negotiate for better rates if you have a stable, high-income job and a decent portfolio.
Let us discuss your financial health and long-term goals today and take you through tailored home loan solutions fit for your unique needs.
Can I apply to major lenders?
It will depend on your situation and whether your preferred bank offers low deposit home loan. Nevertheless, the lender you choose will make or break your loan application. We recommend discussing it with our mortgage specialists so you can make informed decisions.
Besides, finding the right lender can mean the difference between settling with what one bank offers or landing the best deal in the market.
We understand that frequent loan inquiries and bank visits can harm your credit score, so we suggest sitting down with our specialists and skimming through available loan solutions from 40+ lenders in our panel.
We have lenders offering flexible loan features and waived LMI. Our mortgage brokers have experience in senior banking positions and can give you the negotiating power needed to make the most out of your home loan.
Apply for a low deposit home loan today!
Speak with our low deposit home loan specialists at Mortgage Pros by calling 1300 030 388 and filling out our assessment form today!
