Buying a home is a wish that many people on the Gold Coast dream about. But with prices so high right now, it can seem like it is impossible to get there. Most banks prefer you to have a 20% deposit for a home loan approval. Fortunately, that does not always have to be the case. A lot of people are looking for ways to get access to no deposit home loans — but do they actually exist?
Read on to learn about several ways you can get into the housing market without needing a full 20% deposit. Buying a house with no deposit or a low deposit could be a solution for you to find that dream home. It is strongly recommended you chat to a professional mortgage broker before applying for a home loan to ensure you know all the options available to your personal situation.
Talk to PhilCan you buy a house with no deposit?
I guess the real question is can you get a home loan with no deposit?
To be brutally honest, a home loan zero deposit is almost virtually impossible. Home loans without deposit do exist, but they are so rare and are not offered by most lenders. They also come with higher interest rates and a stricter criteria set for eligibility.
However, there are ways to obtain no deposit housing that lenders would consider.
How to buy a house with no deposit:
1. Guarantor loans
A guarantor loan is a loan where a family member or friend guarantees the loan repayments in the event that the borrower is unable to pay. This means that you can buy a house without a deposit, as the lender will take the equity in the guarantor’s property as security.
The guarantor must have enough equity in their property to cover the deposit for your new home. This option can be risky for the guarantor, so it’s important to discuss the risks and responsibilities before going ahead.
Read: How Can Your Parents Help You Secure Your First Home Loan
2. Using equity in another property to buy house without deposit
If you already own a property, you may be able to use the equity in that property as a deposit for your new home. Equity is the difference between the value of the property and the outstanding mortgage.
You can use a home equity loan to borrow against the equity in your existing property to use as a deposit for your new home. However, this option also carries risks and responsibilities, as you are taking on additional debt.
3. Get a non-refundable monetary gift
If you have family members who are willing and able to help, you may be able to receive a monetary gift to use as a deposit for your new home. This gift must be non-refundable, meaning that the giver cannot expect the money back at any point. Lenders will want to see a gift letter outlining the details of the gift and the giver’s relationship to the borrower.
Go Lower with 5% Deposit
Some Gold Coast no deposit new homes are potentially available to prospective homebuyers. But they usually come with very strict criteria for approval:
- Virtually perfect credit history
- Stable and lengthy work history
- Often a higher interest rate than other loans
If these are roadblocks for you though, many lenders also have much lower deposit loans available.
In some cases, you could have as little as 5% of the property price saved and still secure a loan. You may have to pay additional costs like lender mortgage insurance (LMI). But this could be a great alternative to buying a house with no deposit if you can swing the 5% deposit.
Understanding First Home Guarantee Scheme (FGHS)
The First Home Guarantee Scheme (FHGS) allows eligible first-time home buyers to purchase a new or existing owner-occupied property with a minimum deposit of just 5% and avoid paying the Lenders Mortgage Insurance (LMI) premium.
The scheme is limited to 35,000 eligible first-time buyers per year, and the government acts as a guarantor, paying the difference between the deposit saved and the 20% threshold required to waive the LMI. The FHGS can be used in conjunction with other QLD first home buyer grants, and interested applicants can apply through a participating lender or broker.
To qualify for the FHGS, applicants must meet specific criteria related to income, age, citizenship, and property value, as well as provide relevant financial documents during the mortgage application process.
Understanding the First Home Owner Grant
The First Home Owner Grant is a national scheme that provides a one-off grant of $10,000 to eligible first-time homebuyers.
The grant itself can be used to help offset the cost of a home deposit. It may not cover the whole thing, but it could help a great deal.
Please note that the FHOG usually is paid on settlement for new homes or highly renovated ones. This means that if a home is being built or under major construction, you will not receive the grant until you make the first progress payment on the loan.
Also, you will bear the cost of other home buying expenses like moving, legal fees, and the like. These regulations vary by state and territory, so make sure to check all the requirements for your area first.
Can I Use My Superannuation?
Your super may also help pay for your home deposit using Australia’s First Home Super Saver Scheme (FHSS).
The FHSS allows for voluntary concessional and non-concessional (before and after-tax) contributions into your super fund to be used for your “first home savings”. You can then release these contributions and earnings toward the purchase of your first home.
There are some requirements you need to know with the FHSS scheme:
- You must occupy the home as soon as it is practicable.
- You must plan to stay in the property for at least 6 of the first 12 months of ownership.
There are also other requirements to using this program. Check with an expert to better understand everything you need to have in place for this benefit.
Get the Home Buying Help You Need
For first home buyers Gold Coast who need some more information about no deposit home loans, get in touch with Professional Lending Solutions. My team and I will work with you to help you understand all the home loan options available to you.
Chat with us today and get the ball rolling on your own new home.
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