Understanding No Deposit Home Loans

by Ranjan Khatak Director and founder of Your Finance Adviser

The term 'no deposit home loans’ can seek the attention of several customers towards itself very easily. Many customers will feel attracted to such a scheme where a home loan can be available without making any deposit. But the important thing to note here is if there’s an actual thing as ‘no deposit home loan’? This article will provide you a detailed understanding of the no deposit home loan scheme.

The no deposit home loan is a type of loan financing option that allows the customers to borrow 95 percent of a property's purchase price. This loan facility is trending in several countries and is now available in Australia too. But there are only a few banks and non-bank lenders that offer no deposit home loans in Australia.

Although a no deposit home loan does not require any amount to be deposited for getting the loan, there are some other upfront costs involved in this loan for which the borrower should plan his budget, such as stamp duty, legal fees, building inspections and more.

Getting approval for no deposit home loans in Australia is not an easy process and the lenders usually apply a strict criterion while looking at applications for no-deposit home loans. This is because of the high levels of risks involved in lending this type of loan to someone. The approval for the loan is given only if the borrower can fulfill the required lending conditions.

Here's a list of the requirements needed for getting approval to no deposit home loan-

High credit score: The borrowers must maintain a high credit score with one of Australia's main credit reporting agencies.
Repayment history: The borrower is typically asked to show proof that they have been maintaining a clean repayment history by paying all of their current debts on time, such as credit cards, personal loans and rent.
Stable employment income: No deposit home loan borrowers should necessarily have a stable, ongoing job that provides an income high enough that they can afford to repay the loan in future.

After finding out the necessary requirements for applying to a no deposit home loan, the next thing you should do is search for the available options for you to apply for the loan.

Here are the different ways in which you can apply for a no deposit home loan: