No Deposit / 100% Home Loans & Family Equity Home Loans

No deposit/100% home loans are becoming more and more popular among first home buyers especially in NSW, especially since buyers are not required to pay stamp duty on purchases below $500,000 with some concessions available from $500,000 to $600,000.

No Deposit/100% Home Loan Option

Generally borrowers will need to have a clean credit history and be earning a reasonably good income – borrowers will also be required to have at least 2.5% - 3.5% of the purchase price to cover the lenders mortgage insurance, but with the Federal Governments $7,000 First Home Buyers Grant available to First Home Buyers, very little cash is needed by the borrowers to actually get into their first home.

Some lenders do not charge a higher interest rate for these loans and some do – which lender you need to borrow through will depend on many different circumstances such as the amount of income you are earning and the amount of cash you have available to put towards the mortgage insurance.

The next option is the Family Equity Home Loan – this option is by far the most attractive option for borrowers.

Family Equity Home Loan Option

A Family Equity Home requires a family member or friend to pledge their property to the bank to guarantee your loan. From experience the guarantor is usually a parent of one of the borrowers who is more than willing to help their child purchase a home or investment property.

The advantages of this type of funding is that no mortgage insurance is payable by the borrower. The guarantor can actually be used to help service the loan if the borrowers income is not high enough to borrow the amount they need, and up to 110% of the purchase price can be borrowed which is useful in case the buyers are not first home buyers (stamp duty costs) or if they have other debts that they would like to consolidate into one easy monthly home loan payment.

We usually structure these types of loans in such a way that the guarantor only guarantees a small loan as apposed to the whole loan amount – using this structure the borrowers can then concentrate on reducing the guarantors loan as quickly as possible, while the purchased property appreciates in value, allowing the guarantor to be released from the loan somewhere in the near future.

If you would like to enquire about your options for a 100%/No Deposit Home Loan or a Family Equity Home Loan then please submit an Online Enquiry or contact one of our Mortgage Professionals direct on +61 2 9981 5385.