Your client may have trouble securing enough money for a home loan deposit, especially if they are a first-time homebuyer. However, there are several no fee, no deposit mortgage options available to them if they choose the right lender.
Guarantor Loan
With a guarantor loan, your client may be able to borrow 105% of the purchase price, as long as their guarantor is their parents. Therefore, your client will not need to have any savings, but their guarantor will need equity in their own property.
Equity
In some cases, your client may be able to use equity from their property as a deposit on another property. This type of no fee, no deposit mortgage works only if they already own a property and have enough equity available. Your client can refinance their equity, so it is available to use as a deposit. In addition, some lenders may offer them a cash rebate if they do refinance.
First Home Loan Grant
If your client is an Australian citizen and is purchasing their first home, they may be eligible to apply for a First Home Loan Grant. As long as they intend to live in the house and have 5% in genuine savings, they may be exempt from paying Lender’s Mortgage Insurance.
Gifted Deposit
With this type of no deposit home loan, your client’s parents will provide them a lump sum as a gift, meaning they do not have to pay their parents back. In addition, some lenders allow parents to provide 5 to 15% of the price and approve the loan even if your client didn’t save the deposit.
Personal Loan
While this option tends to be frowned upon, some lenders will allow your client to use a personal loan as a home deposit. However, they need to have a high income and no more than $10,000 in debt.
While there are various options for your client if they don’t have enough money for a home loan deposit, the most common type that lenders recommend is a guarantor loan. If your client needs a no deposit loan to purchase a house, consult with the experts at Mortgage Street. We are a non-bank lender specialising in hard-to-secure home loans. We can help you find them a loan that fits their unique financial situation.