Australian No Deposit Home Loans
No deposit home loans increased in availability and popularity during 2006 to the point where both low and no deposit residential property loans are now available from almost all banks and lenders in Australia.
At the beginning of 2006 there were only a few lenders providing no deposit home loan products in Australia.
During 2006 mortgage insurers joined the 100% home loan market when mortgage insurance products were launched to cater for no deposit home loans. This has enabled most banks and lenders today to now have some type of low or no deposit home loan available amongst their home loan product range.
Basic No Deposit Home Loan Types
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Limited guarantee is where family or friends can make some of the existing equity available in their own property to help borrowers obtain finance where no deposit is available.
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Low deposit home loans could be anywhere from the point where lenders mortgage insurance become applicable. Even a no deposit home loan usually requires some available cash from borrowers. Types of low deposit home loans are usually referred to as genuine savings and non genuine savings and are typically where the available deposit is between 3% and 10% of the purchase price.
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Some lenders will lend up to 97% of the property value, or purchase price, (which ever is lowest) but then allow mortgage insurance to be capitalised up to 100% of the purchase price which is usually an economical option compared to 100% loans and above.
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100% no deposit home loans are typically where the entire purchase price is borrowed and any extra costs will need to be met by the borrower.
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A 100% loan is now available over a 40 year term which will lower repayments and make a more expensive property more affordable.
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A 100% investment property loan is now available over a 50 year loan term and stamp duty can be borrowed above the actual valuation of the property to really increase property investors leverage into the property investment market!
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A 105% home loan is where the costs involved in purchasing a property and taking out a no deposit loan can often be included in the no deposit home loan amount.
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A 106% home loan is very similar to the 105% loan except there is an extra 1% available and the insurance fee is different to most other no deposit home loan products.
Basic Low Deposit Home Loan Types
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Low deposit home loan minimum deposit amounts are usually broken up in to genuine savings and non genuine savings.
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3% genuine savings and 5% non genuine savings is the usual minimum thresholds that need to be met for most low deposit home loans.
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Some lenders may consider a 5% non genuine savings amount even if it is borrowed as a personal loan for instance. Most lenders may require proof that the 5% is a gift and repayment is not required.
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Genuine savings must usually be demonstrated by way of savings patterns evident with bank account statements for example or in some cases rent paid.
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A brand new and very innovative option is the Equity Finance Mortgage from Homeloans LTD. This new option could either reduce your actual loan repayments or help to purchase a more expensive home than would normally be possible.
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Another option is to extend the maximum loan term by 10 years to 40 years. More information about forty year home loans and 40 year investment property finance.