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100% Home Loans

If you really want to enter the Melbourne property market now while prices are good and interest rates are falling, but haven’t saved up a deposit yet, you could consider a no-deposit home loan. No deposit home loans

These are loans where you borrow 100% of the property price, and do not need the traditional 10 per cent deposit.   This means you don’t need any savings and can borrow the total cost of the purchase price.  There will, however, still be moving costs and legal fees to consider.  If prices are good in your area, or if interest rates drop to lower levels, many potential first home buyers are tempted to purchase a property before they have saved a deposit.

Recently, due to the global financial crisis, this type of home loan has become less common, with many major banks pulling this product from the market.  There are a few lenders till offering no –deposit home loans but not many.  Once the economy picks up again, lenders may decide to offer this product again.

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The convenience of being able to take out a loan to buy a home whenever you need it, make no-deposit loans attractive to many customers.  You can borrow the full amount of the property price and own that new home faster than if you had to wait and save a deposit.  However, with any loan type there are pros and cons, and in this case, the benefits come with a price, and with these loans because you are borrowing a great amount, the result is that you end up paying more in interest.  It is important that you sit down with a qualified and experienced mortgage advisor and weigh up the options before deciding whether a no-deposit home loan is right for you.

Advantages
There are many advantages to this loan, with the main one being borrowers are able to purchase a property without needing to save the deposit.  This can be useful for first-home buyers, as well as investors or people buying second homes, who find a property before being able to save enough of a deposit.  Remember, you can still access any government grants that you are eligible for such as the first home buyer grant, therefore if you can afford the repayments, a no-deposit loan can be an attractive option.

Considerations
Because you are borrowing a higher amount than you would if you had a deposit, you are going to pay more in interest as the amount of your loan will be higher.  You may also be required to pay Lenders Mortgage Insurance, and there can be higher fees associated with a no-deposit loan.

If your income and budget can afford the mortgage repayments, but you simply haven’t got any deposit saved, then no-deposit home loans are suitable for you.  But, as with any financial decisions, it is beneficial to talk it through with a Local Mortgage Broker.  


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