Welcome to the wild world of Brisbane home loans, where dreams of homeownership can come true, and where the words “no deposit home loans” can cause a ruckus! Tired of hearing about all the impossible hoops you need to jump through just to get a foot on the property ladder?
Well, hold onto your hats folks, because we’re about to dive into the topic of no deposit home loans Brisbane. Yes, you heard that right – NO DEPOSIT! Get ready to be blown away by the possibilities and ask yourself the question, is there really such a thing as a home loan with no deposit? Let’s find out!
Is it possible to buy a house with no deposit?
Let’s be straightforward about one thing: home loans with no deposit do exist, but they’re very few and far between.
It’s tough getting a 100% deposit home loan from any of the traditional lenders. You might get lucky if you have a high income or great repayment history, but as a rule of thumb, 100% home loans don’t exist. You might have to cough up a minimum deposit of around 5% for low deposit home loans.
However, some smaller or specialist lenders might offer their own versions of 100% home loans, but these opportunities are rare and come with harsher terms such as:
- Getting a tertiary education
- Years of continuous employment
- A higher threshold for minimum salary (usually $150,000 p.a. or more)
- An exceptional credit history (hint: they might look into your rental history)
Pros and cons of a no deposit home loan
| Pros | Cons |
|---|---|
| 1. No need to save a large deposit upfront | 1. Higher interest rates |
| 2. Potential to enter the property market sooner | 2. Strict eligibility criteria |
| 3. Opportunity to build equity with less capital | 3. Potential for mortgage stress |
| 4. May have access to government incentives and grants | 4. Tougher loan approval process |
| 5. Less financial stress initially | 5. May have higher ongoing costs |
How to get home loan with no deposit in 3 ways
1. Guarantor loans
With a guarantor loan, a family member or friend provides a guarantee for the loan. How this works is that the lender will use the guarantor’s own property as security for the loan in the absence of a deposit.
They must have equity in their property that can cover at least 20% of the purchase price of the new property. However, the guarantor takes on significant financial risk and is responsible for the loan repayments in case the borrower defaults on their loan.
Before taking out a guarantor loan, it’s essential to carefully consider the potential impact on both the borrower and the guarantor, and seek advice from a financial professional.
2. Using equity to buy a house
Home equity is the difference between the value of a property and the amount that is still owed on the mortgage. If you have an existing property that has built up a significant amount of equity in it, you may be able to use it as collateral to secure a no deposit home loan.
Here’s how you can use home equity to get a no deposit home loan:
- Start by getting an accurate appraisal of your property’s value. This will give you an idea of the amount of equity you have built up and whether it is enough to secure a no deposit loan.
- Contact several lenders to discuss your options for using your home equity.
- Once you have found a lender who can offer you a no deposit home loan, you can apply for the loan.
- If your loan application is approved, you will use your home equity as collateral to secure the loan. This means that if you default on your loan, the lender can take possession of your property.
3. A non-refundable windfall (?)
In order to secure a no deposit home loan, the banks generally require a minimum deposit of 8% to 10%. If your parents are willing to give you a monetary gift to cover this deposit, it can be used towards purchasing your first home.
However, it’s important to note that the banks will carefully consider the gift when making a lending decision. They may require documentation to prove the gift is genuine and not a loan that needs to be repaid. They may also want to see your rental history to verify your ability to make regular repayments on time.
Having some of your own savings, known as genuine savings, can also be beneficial in the lending decision. This demonstrates your commitment and ability to manage your finances and make regular repayments.
Shop around for no deposit home loans with NBHL
If you need help with these kinds of loans, don’t hesitate to get in touch with the team at North Brisbane Home Loans. With years of experience and in-depth knowledge of the lending market, we can assist you in finding the right loan product to suit your personal circumstances.
Contact us today to schedule a consultation.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
