Yes! However you will need help from your parents!
The days of borrowing 100% of the purchase price without any proof of savings have gone. Unfortunately due to the GFC, there are no lenders able to fund these types of loans. However you can still borrow 100% if you get a little creative, or if you get some help from your parents.
You have two options that can help you to borrow 100% of the property value, effectively buying a home with no deposit.
With a guarantee from your parents:
If your parents own a property and are willing to guarantee your loan, then you can borrow 100% or more of the purchase price without proving any savings of your own. The guarantee will be secured by your parents property, behind their existing mortgage. Because of this additional security, some of our lenders are willing to waive the requirement for savings.
This option is by far the most common way for first home buyers and investors to borrow the full purchase price of a property. You can learn more about this option on our guarantor mortgage page.
With a 95% loan and a credit card:
One of our lenders offers a 95% home loan and will then approve a credit card for up to $20,000 in addition to the mortgage. The credit card is at the same low interest rate as the home loan, which enables you to effectively borrow 100% for any property up to $400,000.
So what is the catch? This lender requires you to prove at least 5% of the purchase price, saved in a bank account and to prove it has been held or saved over at least three months.
If you do not have any money then you may need to ask your parents for a gift, which you can then hold for three months to meet this requirement. You can read more about this on our 95% mortgage page or on our genuine savings page.
With a gift from your parents:
If you can reduce your loan down to 90% of the purchase price then you can qualify for a home loan with no proven savings record. If you have been renting for 12 months then you can borrow 95% of the purchase price without proving a savings history. You can read more about this on our no savings page.
If you already own a property:
There are loans that allow you to use the other property you own as additional security, enabling you to borrow 100% of the purchase price of a new property. Please call us on 1300 889 743 or enquire online and one of our mortgage brokers who specialises in no deposit mortgages will call you to discuss your situation in detail.
Vendor finance:
This is a creative method of finance for people who have a small 3% to 5% deposit however do not meet standard bank criteria. In most cases they have a problem with their credit history. This is more expensive than the other options so we only recommend this if you can’t apply for a standard loan. You can read more on our vendor finance page.
Unfortunately there are no lenders in Australia that currently offer a no deposit loan other than the above options. So the best way for you to get a loan is now to try to save a deposit of your own.
Follow these tips to help you qualify for a mortgage:
Of course we all know that every bank and non-bank lender in Australia has their own rates and fees for standard loans and they tend to be all fairly similar in price. However for no deposit finance (guarantor loans or 95% plus credit card loans) some banks are way ahead of the pack with interest rates and flexibility that is unmatched by their competitors.
In particular going for a guarantor will save you a small fortune as you will not pay an LMI premium. We are also likely to be able to negotiate an interest rate lower than those advertised by the banks.
No, you do not always need to have savings if you have a guarantor, however in all other situations savings are required.
First Home Buyers: As a general rule if you are a first home buyer then your First Home Owners Grant (FHOG) should cover most if not all of the costs associated with buying a property. The main costs you will incur are stamp duty (depending on which state you are in), conveyancing fees and Lenders Mortgage Insurance or LMI for short.
Second Home Buyers: Due to the costs of stamp duty and conveyancing non-first home buyers usually need to have a minimum of 5% of the purchase price available unless they have a guarantor. A deposit sourced from a gift from your family or from selling an asset is acceptable to some banks. It is quite common for second home buyers with some savings to use the 95% plus credit card option mentioned above to cover the cost of stamp duty.
Investors: Because investors do not receive the government’s grant and do not receive stamp duty exemptions they will need a minimum of 9% of the purchase price to be able to complete the purchase, unless they have a guarantor. This is 5% to cover the deposit and a minimum of 4% to cover the stamp duty and purchasing costs.
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