True 100% home loans are a thing of the past, but you can get a no deposit loan by using a guarantor or being creative with your deposit savings.
Banks won't just give you 100% of a property's purchasing price any more, but if you can get a family member who owns a property to go guarantor you can still borrow 100%. If that isn't an option then you need to build at least a 5% deposit to get a mortgage. There are more ways to do that than you probably realise.
Compare mortgages that let you borrow up to 95%
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Most of the loans in the table above allow guarantors to cover at least a portion of your loan. All loans in this table have a maximum LVR between 90% and 95% and some may require at least 5% deposit of genuine savings.
Why won't banks give you a 100% unsecured loan?
After the 2008 Global Financial Crisis, Australian banks tightened their lending criteria. Lending someone 100% is considered too risky.
Most borrowers save a 20% deposit, but that's a lot of money. Many banks will happily lend you up to 95% of a property's value, you just need to pay for lenders mortgage insurance on top.
You can skip this completely by using a guarantor or you can find other ways of pulling together a 5% deposit.
100% home loan options and alternatives
A guarantor home loan
A family member (usually a parent) who owns their own property outright can guarantee your deposit. Your guarantor uses their property as security in place of a deposit.
You borrow the money and make repayments as usual, but the guarantor is partly responsible if you can't meet your repayments. A guarantor can cover part or all of a deposit or even the loan itself.
Here are the basic things you need to know about guarantors:
- Eligibility. A guarantor should be a family member over 18 years old who has equity in their property and good credit.
- Risk. If you default on your mortgage (meaning you can't make repayments) then your guarantor might have to pay up. This could force them to sell their property in order to pay back your lender.
- Repaying the deposit. If your guarantor only agreed to guarantee a 20% deposit then once you've repaid 20% of the loan they're off the hook even if you default. This helps minimise the guarantor's risks.
- Avoid LMI. Another advantage of having a guarantor is you can avoid lenders mortgage insurance even though you haven't saved a 20% deposit yourself. This could save you thousands.
Getting a deposit through cash gifts, inheritance or other alternatives
You can scrape a deposit together from many sources. Lenders do want you to have at least 5% of a property's value in genuine savings, but there is a way around this. You can get a deposit together in the following ways:
- Your parents could give you money as a gift or you could inherit the money.
- You could sell an asset, such as shares, to fund your deposit.
- You could use equity in another property you own.
- A first home owners grant counts as part of a deposit.
The genuine savings rule is the tricky issue with the options above (and the fact that not everyone can take advantage of gifts or assets). But if money from a gift, sale or inheritance has been sitting in your account for three to six months most lenders will accept it as genuine savings regardless.
Get a low deposit mortgage
Lastly, you can save a 5% deposit the old-fashioned way and look for a low deposit home loan. There are many mortgages out there which you can get with a 5% or 10% deposit.
How do you spot a low deposit home loan? Look at the maximum insured loan to value ratio (LVR), which should be 90–95%. A 90% LVR means a 10% deposit. A 95% LVR means you only need a 5% deposit. But don't forget there's lenders mortgage insurance on top.
Can I borrow more than 100%?
The only way you can borrow more than 100% of a property's value is by using a guarantor. With a guarantor some lenders will let you borrow up to 110% of a property's value.
You can also read more on no deposit borrowing in our longer guide.