How Can I Buy a Second Property with No Deposit?

Are you hopeful of buying a second home but have no deposit? If yes, then how to buy a second property with no deposit? Using equity to buy a second property might be available to you, especially if you haven’t reviewed your interest rates recently. Read on for everything you need to know about using equity to buy another house and other options that could be available to you.

How does equity work when buying a second home?

If you have owned your home for a number of years, or you have not reviewed your interest rates recently, you may be surprised to learn how much equity you have available in your current home. With Brisbane property prices high and interest rates low, accessing your equity could allow buying a second home with no deposit.

Whether you access your home equity to buy another house without saving for another deposit, or any other reason you might want cash right now, the application process is typically the same.

Home equity is the difference between your property’s market – or appraised – value and the amount you still owe for your mortgage. How much equity you can access comes down to your loan value ratio (LVR) and how you want to access it. Your first step is to talk to an experienced mortgage broker. Our team at North Brisbane Home Loans can assess your equity for you and advise what is possible.

Your mortgage broker will guide you through the application process and once approved, you will have the cash amount you have applied for transferred into your account to use as you wish.

How to buy a second property with no deposit?

Other options to buy a second property with no deposit:

Equity loan

When you do a straight refinance to access your equity, you replace your existing mortgage with a new one and have the surplus cash deposited into a bank account for your use as cash. With a home equity loan, a second mortgage is taken out and this is a debt secured by your property. Which one you choose should be carefully considered with a mortgage broker with experience in refinancing.

Cash out

Cash out refinancing happens when you replace your existing mortgage with a new, larger mortgage and the equity you have applied to access, is paid directly to you. The equity you can access is usually up to 80% of your loan to ensure you keep a healthy LVR on your mortgage.

Cross-collaterisation

This occurs when your lender uses your existing home as security for your second property purchase. This brings both properties under one mortgage. Using your equity in this way means you do not have to have extra savings for the second deposit.

Joint ownership

If you have a strong single income but your current home loan commitment is stopping you saving a sizable amount for a second deposit, joint ownership is an option. This is where you have a co-borrower who has the right deposit amount. We strongly recommend getting financial advice about this option before you sign any contract.

Partial deposit

If you have some equity in your current home but not enough for a full deposit amount on your second property, adding some of your savings together might get you across the line. There are many ways to secure finance when you know the ins and outs of home loans. North Brisbane Home Loans are experts at refinancing and investment finance. We can assess your current home loan, any savings you have and advise on putting your best foot forward for approval the first time.

Can I buy a second house to live in and rent the first?

Many people look at buying a second house and renting the first because they want to upgrade their family home but also want an investment property. Instead of selling the first to refinance your upgrade, you may be able to use your equity in your first home to use as your upgrade deposit. So yes, you can buy a second house to live in and rent the first.

There will be certain conditions you will need to meet. Chatting to a broker will help you understand exactly what you can and cannot do with your current mortgage and equity.

Recap: How to buy investment property with no deposit

• Draw cash out of your equity
• Equity loan
• Cross-collaterisation – two homes, one mortgage
• Joint ownership
• Partial deposit

Want to buy a second property with no deposit?

With the property market so hot right now, savvy North Brisbane homeowners are taking advantage of low interest rates and growing equity. Don’t wait until it’s too late, chat to us today to find out your finance options.