- Posted 17 Sep
- 0 Comments
It’s generally perceived that financing a new home is challenging, and that getting a home loan is the best way to go about securing finance for your home. But taking out a loan to buy a house can be quite daunting, especially if you don’t have enough money saved up to meet the minimum 5% deposit required by most lenders.
Lenders will want some kind of guarantee or assurance of mortgage repayments before they’ll let you borrow money for an investment as big as a house. That’s why the 5% deposit is a necessity to get a home loan.
However if you have a lot of debts to clear, or you just don’t have enough savings to put down as a deposit and you need to buy a house right away, there might still be a way to secure a home loan from several banks in Australia.
- If you’ve already invested in another property that you don’t wish to sell just yet, you can use the equity in this home to access a home loan. What happens in this case is that the lender uses your investment property as a guarantee or deposit against the new loan .
- For first homebuyers with a good income, you can also resort to something called vendor finance. Even if you have a comfortable income, you might sometimes find it difficult to get accepted for a home loan. If you face such a situation, you can turn to a wealthy private investor who is open to the idea of loaning you the money you’d need for the deposit. This way you can use this sum as a down payment to take out a loan to buy a new home.
- Another way to get a home loan without the 5% deposit fee is to get a guarantor loan with the help of your parents or other family members who have their own investment property. Your parents or relatives will function as the guarantors in such cases. What they have to do in order to help you is to allow their property to act as a guarantee on your home loan. Your home loan will be effectively secured against their property, so you can work to pay the money back to the lender gradually. Once you’ve paid off everything, you can apply to remove the guarantee.
- You can also ask for your parents directly to help pay the initial deposit. If your parents have enough savings and can afford it, you can get a gift from your parents of 9% to 10% of the price of the house and use it as the deposit money.
- If you do not have enough savings of your own, you can also use a personal loan to secure a home loan. You can take out a personal loan from any lender to pay the 5% deposit to obtain the home loan that you require. Though you will also need to have some more cash ready in order to pay for stamp duty and a few other extra costs.
Need help taking out a home loan? Our experts are just a call away, ready to help you. Contact us today to get the advice and assistance you need when looking at home loan options.