Many times, people ask whether they can buy a home with zero deposit or need to arrange a high amount of deposit. Well, some lenders offer no deposit home loans in the Australian market. If you want to know different methods to buy a house with zero deposit, continue reading this blog.
Overview of No Deposit Home Loans
As the name implies, it is a type of home loan where borrowers are not required to give a deposit when buying a property. When borrowers opt for a zero-deposit home loan scheme, they must have good credit scores and a steady income. In addition to this, they may also need a guarantor or a co-borrower. Moreover, if you are looking for no deposit home loans with no guarantor, then you’ll have various other options. For this, you need to look at the following section to know possible options that can allow you to buy a home with a low or zero deposit.
How to Buy a House with No Deposit?
If you meet certain conditions, then you may get approved for a home loan of 100% of the purchase price of a property via some lenders. Take a look at the following points to know different ways to know how can you buy a house without a deposit or a low deposit:
- Guarantor Loan
This is the most effective and suggested method for obtaining a no deposit loan. A guarantor is someone who owns real estate and is prepared to assume legal liability if the borrower is unable to make loan repayments. You can borrow up to 105% of the cost of the house with a guarantor home loan. It also implies that a deposit is not required. According to how it operates, the owner would be responsible for 80% of the purchase price of the purchased property. In other words, the bank will mortgage the property you are buying with an 80% loan. What happens to the remaining 20% or 25%, then? The leftover goes on to the property of a guarantor.
- Use Equity to Purchase a Home
Home equity is the difference between the property’s value and the remaining amount of your mortgage. When buying a house with no deposit, you might be able to utilise an existing property as collateral to obtain a no-deposit home loan if it has the right amount of equity.
- First Home Owners Grant
First-home buyers get relief from paying a huge deposit amount by applying for a first home owners grant (FHOG) from their state government. The following grant will be offered in different states in Australia:
- NSW: $10,000
- QLD: $15,000
- VIC: $10,000
- TAS: $30,000
- SA: $15,000
- WA: $10,000
- NT: $10,000
- First Home Guarantee
Eligible first-home buyers can buy their first home with only a 5% deposit using the first home guarantee scheme with no LMI. With this scheme, the government acts as a guarantor and secures the leftover 20% deposit.
- Family Home Guarantee
The family home guarantee scheme is for eligible single parents with at least one dependent child. It allows single parents to buy or construct a home using a 2% deposit.
Moreover, you can now turn your dream of owning a home into reality by switching from rent to buy with no deposit home loans. You can ask Star Homeloans to check what option you can choose to buy your own home with no deposit or low deposit.
Lending Criteria for No Deposit Home Loans
Lenders usually apply very strict criteria to approve one who is looking to buy a house with no deposit as it involves a high level of risk in lending to someone in that situation. The following are some requirements for borrowers:
- Good credit score
- Responsible repayment
- Stable employment income
If you are looking for low or no deposit home loans to get home ownership, you can contact a reliable broker. For this, Home Star Homeloans are here to help you choose the right option as per your financial condition. We are a Sydney-based company, but our specialty is that we offer home loan & mortgage services across Australia.