There are a number of options still available for First Home Buyers who are looking to purchase their first home without a saved deposit. While 100% home loans have changed somewhat since the global financial crisis, they are still possible for the right applicants.
The most common form of 100% home loan is to use a Guarantor. This is generally the most cost effective way of avoiding savings requirements. However, it does require your parents or close family relative to have good equity in their own home and be willing to act as a guarantor for your home loan.
For more information on this you may want to read up on our article Why Use A Guarantor?.
A second option is to receive a gift from family members to cover your deposit. Not all lenders will accept this as they will want to see savings history and it does depend on the amount that family members are able to gift to you. Depending on your circumstances there may be a requirement that this amount is left in an account in your name for three months. This policy does vary significantly from lender to lender.
The same criteria apply to most lump sum repayments going into your accounts such as tax refunds or inheritances.
The final way is to use a personal loan or unsecured line of credit to fund your deposit. This means that you would have two loans, one for the deposit and one for the actual home loan.
You will need to have a very strong income in order for this to work for you. Very few banks will accept it and the criteria is very strict. However, for the right applicant it may be a possibility.
We recommend not going around and applying for multiple personal loans before discussing with your bank or broker. The process of doing so incorrectly, could hurt your credit score and stop you from getting your home loan approval.
If you want information on No Savings Home Loans, please get in touch with us about our obligation free mortgage broker service and we will be more than happy to explain the options that are available to you.