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How to buy a home with a low deposit

Taking out a loan to buy a house can be quite daunting, especially if you don’t have enough money saved up to meet the minimum 5% deposit required by most lenders. They will want to make sure you can pay back a home loan before they decide to let you borrow for an investment as big as a house. That’s why the 5% deposit is a necessity to secure a home loan.

If you have a lot of debts to clear, or you just don’t have enough savings to put down as a deposit, there might still be a way to secure a home loan from several lenders in Australia.

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Equity

If you've already bought the house you currently live in and want to buy a second one, your first home can help you out. Having owned your home for a couple of years means you should have a reasonable equity, you can use this to get a home loan. Your home's equity is essentially its market value. A lender can use your current home as a ‘deposit’ for the new loan of your second home.

How much equity can you access?

$

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$

Guarantor loans

Another way to get a home loan if you don’t have the 5% deposit fee is to get something called a guarantor loan. A guarantor loan is when you get your parents or other family members use the equity they hold in their own property to help fund the deposit for a new property.

This means that you can pay the lender back gradually, but it also means that if you can’t pay the lender then your guarantor is legally responsible for doing so. Once you’ve paid off everything, you can apply to remove the guarantee.

You can also ask your parents for a cash gift to help pay the initial deposit. If they have enough savings and are willing, they can give you 5 to 10% of the price of the house, which can be used as the deposit money.

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If you need help taking out a home loan don’t be afraid to contact our Home Loan Specialists. They are ready to help and answer all your questions. Contact us today to get the advice and assistance you need when looking at home loan options.

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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