Refinancing a home loan without equity

Specialist lenders or guarantors may be able to help you refinance even if you haven't built up equity.

The loans below are not 0% deposit or no equity home loans, but allow applications from borrowers with 5 - 10% deposit or equity. Read on to find out how to refinance with no equity.

Information about low deposit home loans

Compare 90 - 95% LVR home loans

Rates last updated October 18th, 2018
$
Loan purpose
Offset account
Loan type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.74%
3.74%
$0
$0 p.a.
110%
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.
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only. Eligible borrowers can get a 15% discount on home and contents insurance for the life of their loan.
4.65%
5.02%
$0
$395 p.a.
95%
No application fee and 100% offset account. Refinance to this loan and you could get $1,500 cashback.
3.98%
5.13%
$600
$8 monthly ($96 p.a.)
95%
A fixed rate home loan with additional repayment options.
3.87%
3.89%
$0
$0 p.a.
95%
A low deposit mortgage for aspiring home owners. Fees are low and you can make extra repayments.
4.04%
5.05%
$600
$8 monthly ($96 p.a.)
95%
Fix in a competitive rate for three years.
4.08%
4.09%
$0
$0 p.a.
95%
Special Owner Occupier Rate. Free Offset Account.
4.64%
4.66%
$0
$0 p.a.
95%
New customers can score a discounted rate and access to a redraw facility.
4.48%
4.70%
$595
$0 p.a.
95%
Switch to this loan and get a $1,500 refinance cashback. Discount off the standard variable rate and no application fee.
4.33%
4.34%
$0
$0 p.a.
95%
A special investment rate and an offset account.
4.29%
4.26%
$0
$0 p.a.
95%
A competitive 3-year fixed rate loan with a high max insured LVR.
3.99%
4.86%
$595
$0 p.a.
95%
Split you home loan for free with one of the lowest fixed home loan rates.
3.99%
4.66%
$375
$15 monthly ($180 p.a.)
95%
A three year fixed rate loan with 100% offset account.
4.14%
4.33%
$0
$0 p.a.
95%
Borrow up to 95% LVR with no application fee and low ongoing fee.

Compare up to 4 providers

What's equity?

Equity refers to the portion of your property that you actually own, which can be worked out by subtracting the outstanding loan amount from the market value of the property. Equity is important to a lender because it indicates the amount of risk you have as a borrower. A smaller amount of equity means you own less of your home and therefore means there's a greater chance that if you defaulted on your loan and had to sell your property, the value of the property wouldn't be enough to cover the outstanding principal.

Calculating your equity

Calculate your equity

For example, if you purchased a home for $450,000 with a $70,000 deposit and five years later had paid off $35,000 from your principal, you'd be left with a principal of $345,000. If your property had increased in value, let's say by 10%, you'd have $150,000 in equity in your home.

How to work out principal remaining

$450,000 (original purchase price) - $70,000 (deposit) = $380,000

$380,000 - $35,000 (amount of principal paid off after five years) = $345,000

10% (value increase) of $450,000 = $45,000

$450,000 + $45,000 = $495,000

$495,000 - $345,000 (principal remaining) = $150,000.

How much equity do I need to refinance?

The amount of equity that you need to refinance will depend on the lender's individual criteria. However, it's important to note that many loans come with a maximum LVR of 95%, which means you cannot borrow more than 95% of the value of your home.

With many lenders, you need at least 20% equity built up in order to qualify for a refinanced mortgage.

If you've only had your existing home loan for a short time, refinancing may be risky as you may not have built up enough equity to qualify with a new lender and switching lenders may not benefit you financially. You may even end up having to pay for lenders mortgage insurance (LMI) a second time. This is why it may be important to speak with your accountant or mortgage broker to ensure that refinancing is the right decision for you.

Learn more about the amount of equity that you need to refinance your mortgage.

How can I refinance if I haven't built up equity?

  • Consider specialist lenders. If you're looking to refinance and you've only built up a small amount of equity in your home, think about refinancing to specialist lenders or building societies. These lenders may have more lenient eligibility criteria when it comes to determining your serviceability potential. If you can demonstrate that you have enough savings, income or assets to service the loan, the lender may overlook the minimal amount of equity that you have.
  • Find a guarantor. With a small amount of equity in your existing home, you may want to refinance to a guarantor loan. This can boost your borrowing capacity as the guarantor essentially takes responsibility for servicing the loan if you default.
  • Independent valuation. If you can prove that your property has increased in value, then the lender may be more inclined to let you refinance and borrow a larger amount of funds.
  • Request a copy of credit file. With a small amount of equity, you present a larger risk to the lender. This is why it may be a good idea to take measures to trim your existing debt and clean up your credit file. If you can show the lender that you make a conscious effort to meet your repayments on time and make extra repayments in the past, then they may be more likely to approve your refinance application.

Marc Terrano

Marc Terrano is a Lead Publisher at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

Get a very low interest rate and pay fewer fees. Enjoy a fast online application process and add a 100% offset account for $10 a month.

HSBC Home Value Loan - (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.

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4 Responses

  1. Default Gravatar
    JamesJuly 31, 2018

    I want to increase my mortgage with little equity to pay credit cards off. Is this possible?

    • finder Customer Care
      JeniAugust 9, 2018Staff

      Hi James,

      Thank you for getting in touch with finder.

      Yes, that is possible. If you’ve paid down your loan or your home has increased in value, you may be able to use your equity to refinance or increase your home loan. Refinancing to a debt consolidation loan involves reviewing your existing debts (and mortgage), and combining them into a new mortgage so that you have one monthly repayment, instead of several repayments.

      I suggest that you speak with your bank regarding this. In addition, you may learn more about refinancing your home loan to consolidate debt on this page.

      I hope this helps.

      Please feel free to reach out to us if you have any other enquiries.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

  2. Default Gravatar
    RachelAugust 21, 2014

    We want to refinance our mortgage.
    Current professional evaluation came in at $865,000 resale and we currently have a home loan of $715,000 and wish to increase it to $780,000.
    We also have a guarantor willing to put up an unmortgaged property over the loan. We have already been rejected by Westpac as they apparently don’t allow guarantee on a refinance only a new home purchase.
    I had never heard of this, please advise your thoughts……

    • finder Customer Care
      ShirleyAugust 22, 2014Staff

      Hi Rachel,

      Thanks for your question.

      In general, guarantors are designed to help first home buyers purchase a property. Some banks might not be able to offer this feature when it comes to refinancing.

      If you’d like, you might want to speak to a mortgage broker; they may be able to point you in the right direction and help you with your application.

      Cheers,
      Shirley

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