Most home loans require 20% of the home value as deposit. This is often a substantial amount and can make a big dent in your savings. Many prospective borrowers don’t have enough money to pay this deposit. In such cases, there are two options available to you.
You can choose a low deposit home or a no deposit home. At Home Loan Comparison Co, we can help you compare all available loans in these two categories to determine which option is best suited for you. This article explains important facts about low deposit homes that can help:
How Small is the Deposit?
Most low deposit loans cover 90% to 95% of the home value so you might only need to pay around 10% to 5% loan deposit. For example, if you intend to buy a $500,000 property, the traditional deposit will be around $100,000 at 20%.
Under the low deposit loan scheme, you might only need to pay around $25,000. This saves a lot of money and makes it easier for people to buy homes.
We recommend paying as much deposit as you can. If you can manage 10% without hurting your finances too much, it is a good idea to pay that deposit. It will help reduce lender’s mortgage premiums, interest rates, and open up new features.
How Difficult is it Get This Loan?
Many lenders advertise their low deposit loans in the hope to attract clients, but they don’t grant it easily. These loans pose a higher risk to them so they will look at several factors to ensure you fit into the right criteria. Here’s what they will look at:
- Credit History – If you have an excellentcredit history, lenders will be more inclined to lend you money. There should be no defaults on your credit history report.
- Employment History –Lenders want to make sure you have a goodemployment history. This shows them you will probably have a steady income during the loan term. If you have the same job for more than six months or have worked in the same industry in similar roles for a long time, there’s a higher chance of you getting a loan.
- Debts – The lender will look into your current level of debt before offering a loan. If you have several credit card debts, personal loan debts, and other such concerns, you might not get a loan.
If you want to know more, don’t hesitate to contact us at Home Loan Comparison Coon0419 856 669.