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- Got little deposit available?? ... Read on!
95% home loans
Please note ... due to the global financial crisis, 100% home loans have been withdrawn by all major Australian lenders. The maximum loan to value ration has been reduced to approximately 97% (ie 95% loan + mortgage insurance of approx 2% (from April 2009)
Do you want to become a home owner but have little deposit available?... If so then a 95% home loan may be best for you.
Most Australian lenders will allow a loan up to 95% of the value of the property you are purchasing, and will then also lend you an additional amount to pay for mortgage insurance taking the total loan to around the 97% mark.
Using a 95% home Loan, the amount of deposit you will need to contribute is dependent on a number of factors including the cost of the property, whether or not you are a first home buyer, and the state or Australia that you purchase in. As a rough guide for NSW assuming a $10,500 first home owners grant ....
- a $250,000 property could be purchased with as little as $3,500 deposit
- a $500,000 property would require about a $16,000 deposit
The reason for the varying deposit requirement is that a property purchased at any particular price will always have extra buying costs. These may include conveyancing fees, loan application fees, mortgage registration fees, and mortgage insurance (or equivalent). At lower property price levels, the First Home Owners Grant is sufficient to cover these extra buying costs. As the property price increases however, the extra buying costs will come to a point where they exceed the First Home Owners Grant and any property purchased above this level using a 95% loan will require at least some deposit.
if you are buying in state other than NSW, the amount of deposit you require (compared to the list above) is dictated by the stamp duty exemptions applicable. More information on comparative stamp duty costs is available in our First Home Buyer e-Course (see below in blue) or by clicking our stamp duty page.
Finally, if your desired property price dictates that you have to have provide a deposit, most lenders are flexible on where that deposit comes from. For example that deposit could come from your own savings, or from a gift from family or friends, or even from a loan from another source (ie a personal loan or even drawings from a credit card may be acceptable). Certain lenders may also require you show some evidence of savings before you qualify to get a loan with them. This is called the "genuine savings" requirement.
Home Loan Advice Centre's loan service is provided to you completely free of charge. We can do this because our lenders (30 of Australia's main lending institutions) pay us commissions based on the wholesale volume of loans our group refers to them. We can therefore, offer you our experience and expertise, and guide you through the entire home buying journey, without charging you a cent. You end up with exactly the same loan if you'd organised it through a bank yourself, but we do all the leg work and negotiations with the banks for you ..... a great result! So if you are looking to buy a home or investment property visit our 5 minute online enquiry form. We'll assess your loan options and send you a full report of your capacity. Also we'll include parts 1 and 2 of our eCourse ... an indepth guide to buying property in Australia. Click to see a sample. |
If you believe that this type of loan is most suitable to your situation then please contact us to find details or fill in the online enquiry form on our website.
To find out more about 95% home loans please call Home Loan Advice Centre on 02-9210-1000 or see the following links:
Application process
