While property price growth is slowing in some parts of Australia, the cost of living is rising, making saving for a home even more difficult. With that in mind, here are some other options for obtaining a home loan without a 20% deposit! 🏡
1. Lenders Mortgage Insurance (LMI) is a one-time payment that protects the lender if you are unable to repay your home loan. It is calculated on a sliding scale, so the lower the deposit, the higher the LMI fee. Generally any Loan to Value ratio (LVR) over 80%, incurs an LMI fee.
2. Home Guarantee Scheme. This is the federal governments program (formerly FHLDS – First Home Loan Deposit Scheme) that allows first-time home buyers to purchase a home without having to save a 20% deposit. Eligible first home buyers can purchase a home with as little as a 5% deposit utilising a spot in the scheme, with the government covering the other 15%, therefore avoiding LMI. Were have helped many clients over the past 2 years purchase a home using this avenue and it’s fantastic! This is very different to the Equity Scheme which we do not endorse.
3. Parental Guarantee loans or a Guarantor loan structure, are becoming more and more popular. Especially for applicants who may not have a big enough deposit to buy a house, but do have the borrowing capacity to service a loan. These types of loans are structured in such a way that the loan is secured by both the property you are buying and the property owned by the guarantor. Generally an 80% loan is held over the primary property, and the remaining 15% loan (for example) is held over the guarantors property.
4. A Financial Gift is a monetary gift with no obligation to repay that can partially or completely pay for your deposit, usually from a parent or other family member. These are very common now, especially as it is often hard to save up a big deposit for first home buyers.
Are you looking for the best home loan but don’t have a 20% down payment?
Our Home Loan Specialists Kylie and Sam from Enlighten Financial Solutions are here to assist you. 🙌🏼
Call one of our friendly mortgage brokers at a time that works for you.