No deposit home loans may seem like an impossible dream in this market. Current conditions for borrowers and for lenders may appear tight when you read all the headlines, but believe me the world has not stopped!
Who can apply?
No deposit loans are just another mortgage product and are ideal for:
* People who have not saved the 20 per cent deposit that traditional lenders require before offering a mortgage.
* Buyers who can demonstrate that they have the capacity to service the mortgage.
Pity the poor souls in the USA who are now being dispossessed of their homes after being sold unaffordable mortgages, many of them no deposit home loans. Of course many of those borrowers were not suitable applicants for any home and many purchased houses that were over-valued in the first place!
No deposit home loans require a guarantor for the deposit component of the mortgage. The guarantee is limited to the amount of the deposit. This is very significant as it gives peace of mind to the borrower. Further, all the guarantor requires is to have sufficient equity in their own home.
How does it work?
No deposit loans require:
* A guarantor (for example a parent or sibling).
* A guarantee limited to the 20 per cent deposit requirements.
* OR mortgage insurance if you don't have a guarantor.
If for example you are purchasing a house for $350,000, the "normal" deposit required would be $70,000. For first home buyers who will be eligible for stamp duty concessions and the Government's First Home Buyers Grant, the buyer can in fact with the help of a no deposit home loan secure the home with literally no deposit!
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