Home Loan Advice Centre guides you through the entire home buying journey, without charging you for our service. Click here for our 5 minute online enquiry page . We’ll assess your loan options and send you a full report of your capacity.
The amount you can borrow is affected by your income, your deposit, and bank’s serviceabilty criteria which is linked to interest rates, cost of living, and your existing liabilities etc. See our Borrowing Power calculator for a rough estimate.
Home Loan Advice Centre helps borrowers Australia-wide. We specialise in Sydney and NSW and regularly help clients in remote areas and other states. Feel free to contact us on 02-9210-1000 or 1300-729-177 to see how we can help you.
Low deposit loans
Do you want to become a home owner but have little deposit available?… If so then a low deposit home loan may be best for you
Some lenders will allow loans up to 95% of the value of the property you are purchasing, and will then also lend you an additional amount to pay for mortgage insurance taking the total loan to around the 97-98% or more mark. A borrower can consider the underlying loan of ~95% as the loan the lender is give you which goes towards helping you purchase the property. The remaining loan above the ~95% mark can be considered a loan provided by the lender to pay for the mortgage insurance … a cost charged to you by the lender, in order to insure itself against any potential loss. Lenders consider “high loan to value ratio” loans to be relatively risky and pass their cost, to insure against this risk, onto borrowers. Whilst it’s unfortunate borrowers incur this cost, the upside is that, due to the existence of mortgage insurance, lenders are willing to lend to such high loan to value ratios of around 95%. A good and cheaper alternative to a low deposit home loan if it’s available to you may be a family guarantee loan
Your Required Deposit
Using a 95% home Loan, the amount of deposit you will need to contribute is dependent on whether you receive any first home buyer benefits (First Home Owners Grant or stamp duty exemption) and any other purchase costs you may incur such as your solicitor’s fees and any supplementary government charges. If you receive no first home buyer benefits and have a stamp duty cost for example, your own deposit may need to be 5% of the property cost (ie the difference between the underlying 95% loan and 100% of the cost price of the property) plus stamp duty + your solicitor fees + small supplementary costs. At the other end of the spectrum, a first home buyer who may receive say a $10,000 First Home Owners Grant plus get full stamp duty exemption may need only a few thousand dollars deposit to purchase a lower cost property.
More information on comparative property purchase costs is available in the property buying cost calculator or by calling us on 02-9210-1000.
Lenders may also have rules requiring you show a “capacity to save” up to 5% of the cost price via a 3 month savings record. This is called “genuine savings” and the requirement is on a case-by-case basis. It is also dependent on your final required loan to value ratio and loan amount. There are various ways to either comply or avoid needing to comply and our knowledge and experience on how to achieve this is part of benefit of using Home Loan Advice Centre to help with your loan.