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How to buy a home with no deposit

If you aren't able to save the standard 20% for your home loan deposit, a no deposit home loan with a guarantor might be an option

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You need to have a family member who owns their own home and can use it as security to cover your deposit. Banks won't give you a normal home loan with no deposit. You could save up a 5% deposit, but if this isn't feasible you may still get into the property market with a guarantor loan. It's not an option for every borrower. Read on to learn more about no deposit mortgages and start comparing loans.

Comparison of 90-95% max LVR home loans that allow guarantors

Data updated regularly
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years
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
St.George Basic Home Loan
2.49%
2.51%
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
Get this low-rate variable loan with a 20% deposit and pay $0 application fee. Borrow from $150k (or $250k to be eligible for the cashback offer) (terms, conditions & exclusions apply).
Westpac Flexi First Option Home Loan
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
$577.55
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Bank of Melbourne Advantage Package Fixed Home Loan
1.94%
3.21%
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Lock in a low fixed rate loan for four years. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
BankSA Basic Home Loan
2.49%
2.51%
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
A competitive variable rate loan from BankSA. Refinancers borrowing $200,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Bank of Melbourne Basic Home Loan
2.49%
2.51%
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
St.George Fixed Rate Advantage Package
1.94%
3.21%
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Lock in a very low rate for four years. Requires a 20% deposit. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
$0
$0 p.a.
80%
$554.81
Home buyers can get a very low discounted variable rate for the first year. This loan has a revert rate of 2.48%. Requires a 20% deposit. Add an offset account for an additional 0.10% on your interest rate.
Bank of Melbourne Basic Home Loan
2.54%
2.56%
$0
$0 p.a.
90%
$596.91
$2,000 cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get a $2,000 cashback (Other terms, conditions and exclusions apply).
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan
2.59%
2.6%
$0
$0 p.a.
110%
$600.83
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, QLD and ACT only.
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How does a guarantor no deposit home loan work?

Guarantor loans are loans which allow your parent or close family member to guarantee a portion of your loan using their property as security. Following the global financial crisis (GFC), these loans are the only way to buy a home with no deposit.

What happened to 100% home loans?

In most cases a no deposit guarantor home loan is the same as a regular home loan. This means that you can compare most types of loans, including those with fixed or variable rates. Other features offered include extra repayment options, offset accounts, redraw facilities and more. The way the guarantee works is also simple. Let's use an example to show how it would work.

Dan's no deposit home loan

Dan wants to buy a property worth $500,000, and has a very small deposit. His parents agree to become guarantors for his loan, and guarantee 20% of the property purchase, which is $100,000. Dan uses his own small deposit to pay for the other upfront costs associated with purchasing the property, while his parent's guarantee serves as the deposit.Dan's parents are responsible for the portion of his loan they guarantee. This means if Dan failed to make his repayments and ultimately defaulted on his loan, his parents would be liable for $100,000.

Dan works hard paying off his loan, and in five years, has paid $100,000 from his loan. At this point, he applies with his lender to remove his parents as guarantors from his loan, and they're no longer responsible for him in the event he defaults on his loan. Because he didn't have to pay LMI either, Dan also saved as much as $15,000 if he had saved up a deposit of 5%.

Who can be a guarantor and how

What should I look for in a no deposit home loan?

Choosing a no deposit home loan is similar to choosing a standard home loan since the features are the same. You'll want to look at the rates, fees and features. However, you'll also want to compare each lender's policy on guarantors.

All lenders will have different terms and conditions concerning who, what, where and how your guarantor is going to fund your loan. Some lenders also impose restrictions on no deposit or guarantor home loans and this type of mortgage may not be available for self-employed borrowers. Make sure you read all the fine print to match your personal and financial situation with your guarantor.

You'll also want to ask about your lender's approval process. When you apply for a no deposit home loan, the approval process can be lengthy and more difficult compared to that of a traditional mortgage application, because the lender will need to evaluate the security and financial situation of your guarantor.

Some alternative types of deposits

What if you can't find a guarantor for your home loan? You could look at some alternative ways of supplying a deposit.

Personal loan as deposit

Most lenders require at least 5% genuine savings, which means they will want to see evidence that your deposit comes from a pattern of saving. Some lenders, however, offer home loans without genuine savings. If you have a high enough income to afford two loan repayments and have good credit history, you may be able to get a personal loan to cover the cost of a home loan deposit. However, taking out a personal loan will impact your home loan borrowing capacity.

Monetary gift or windfall

If you've received a large monetary gift or have come into some money as a result of a windfall, you may be able to use this money as a home loan deposit. While you could seek out a lender that doesn't require genuine savings, if you hold money in your account for three to six months most lenders will consider it genuine savings.

Equity

If you already own a property, you can use the equity in your property as a deposit for another property. Equity is the difference between the amount your property is worth and the amount you owe on your home loan. Most lenders will let you use up to 80% of the equity in your property as a deposit, and some will allow you to use up to 95% if you pay lenders mortgage insurance (LMI).

Low deposit home loans

If you can't find anyone to serve as a guarantor, you'll need to save a deposit. Fortunately, many lenders offer loans with as little as a 5% deposit. This will see you paying LMI, but you'll also be able to get into the housing market quicker. You can compare low deposit home loans in the table below.

Data updated regularly
Name Product Interest Rate (p.a.) Comp. Rate^ Application Fee Ongoing Fees Max LVR Monthly Payment
St.George Basic Home Loan
2.54%
2.56%
$0
$0 p.a.
90%
$2,000 cashback.
With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get a $2,000 cashback (terms, conditions & exclusions apply)
CUA Achieve Variable Home Loan
2.35%
2.4%
$600
$0 p.a.
95%
Home buyers can get a competitive, low-fee variable rate plus a 100% offset account. Low deposit option available. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs. Eligible refinancers can get a $2,000 pre-paid credit card when they switch to CUA.
Newcastle Permanent Building Society Fixed Rate Home Loan
2.38%
4.25%
$595
$0 p.a.
95%
$2,000 refinance cashback
A low 3-year fixed rate with the option to split your loan for free. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Suncorp Back to Basics Home Loan
2.59%
2.6%
$0
$0 p.a.
90%
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.
Greater Bank Ultimate Home Loan
3.46%
3.88%
$0
$395 p.a.
90%
Build your new home with a variable interest rate and enjoy a 100% offset account. 10% deposit option available.
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10 Responses

    Default Gravatar
    BrianAugust 16, 2016

    I want to get loan of ksh.10000 to start my small business.How can you help me? and where can i borrow this money from?
    please kindly help me.
    Thank you.

      Avatarfinder Customer Care
      ElizabethAugust 16, 2016Staff

      Hi Brian,

      You’ve come through to finder.com.au, an Australian financial comparison service, and unfortunately the lenders we have available for comparison can only consider you for a loan if you are currently residing in Australia. You may need to find a lender in Kenya to start your small business.

      Sorry I couldn’t be of more assistance,

      Elizabeth

    Default Gravatar
    AndrewJune 9, 2016

    I have over 20% deposit but don’t have the savings history to back it up. We satisfied all other criteria but that one and was subsequently denied.

    Any help would be appreciated

      Avatarfinder Customer Care
      MarcJune 14, 2016Staff

      Hi Andrew,

      Thanks for the question.

      Some lenders will require evidence of genuine savings. The definition of genuine savings can vary depending on the lender, but many lenders will want to see evidence of your deposit being in a borrower’s account for at least 3 months.

      Some lenders may not require this evidence but may charge a higher interest rate. A good mortgage broker will be able to advise which lender is best for these types of situations.

      I hope this helps,
      Marc.

    Default Gravatar
    ZadeMarch 10, 2016

    I want to buy a house and have no deposit, but heard and read about it saying I need 5% still

    Default Gravatar
    ThabaniMay 17, 2015

    I am looking for a 0% deposit,professional home loan if possible.It would be for a joint account,both parties are registered nurses

      Default Gravatar
      BelindaMay 28, 2015

      Hi Thabani,

      Thanks for your enquiry.

      In most cases, a no deposit home loan is similar to a regular home loan, however you’ll need to find a guarantor to borrow 100% of the property value.

      A list of lenders that offer a maximum LVR of 95% can be found above on this page.

      Please note that due to tighter lending restrictions, 100% home loans are only possible if you use a guarantor.

      Thanks,
      Belinda

      Default Gravatar
      LeeanneDecember 3, 2015

      We are looking at a property value 384,000 we have no savings or deposit but have a parent guarantor with 40,000 equity is this possible

      Avatarfinder Customer Care
      MarcDecember 3, 2015Staff

      Hi Leeanne,

      Thanks for the question.

      This is possible with some lenders, but as each has their own unique lending policies surrounding guarantors, I would recommend approaching lenders who you’re interested in and then speaking with them directly if they would lend to you.

      You might also want to consult a mortgage broker, who can recommend specific loans and lenders for your situation.

      Before applying for a home loan, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.

      I hope this helps,
      Marc

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