What is No Deposit Home Loans?
The ‘no-deposit home loans’ is a word that is often heard in Australia. But many people still fail to understand the complete meaning of this type of loan. Here in this blog, we have provided a complete overview of the no deposit home loans in Australia.
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 offered by some home loan lenders in the Australian market, but not all. Although there is no need of depositing any amount for getting this loan, however, there are some other upfront costs involved for which the borrower should plan his budget, such as stamp duty, legal fees, building inspections and more.
Getting approval for a no deposit home loan is not an easy process. The policies adopted by the lenders while providing no deposit home loans in Australia usually come with a strict criterion. This is because there is a high level of risks involved in lending this type of loan to someone. Generally, the borrowers are required to fulfill these following requirements in order to get their application approved by the lenders:
High credit rating: The borrowers are required to maintain a high credit score with one of Australia's main credit reporting agencies such as Equifax or Dun & Bradstreet. The lender can research a borrower’s credit repayment history through these credit reporting agencies.
Stable and sufficient income: Lenders also require the borrowers to demonstrate that they have sufficient, stable and ongoing employment income that they will enable them to afford the repayments of the loan in future.
Repayment history: The borrower is required 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.
There different options available for borrowers to apply for no deposit home loans. The applicants can improve their chances of approval by:
- Having a guarantor. A guarantor agrees to be legally liable for repayments if the borrower defaults.
- Accessing a First Home Owners Grant
- First Home Loan Deposit Scheme
- Monetary gift
- Using the equity that they already have in another property
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