In the Australian home loan market it is extremely rare to find a no deposit home loan. While there are home loan options that will require you to have minimal deposit amounts you will not be able to borrow from the majority of lenders without some form of deposit or guarantee.
This is as much for your own protection as for the banks’ because saving for a deposit will allow you to prepare for when you will have monthly repayments on your loan.
Also, the larger your deposit is the less of a risk the bank will deem you to be in assessing you for a loan. This has many benefits including offers of low interest rates and the waiving of lender’s mortgage insurance which can add thousands to the total cost of buying a home.
How to save for a house deposit
If you do want a home loan but you have no money saved for a deposit there are some ways to begin your saving process that may make it seem less daunting.
Budgeting your incoming and outgoing expenses is the best way to begin saving for a home loan. Spend a month recording what goes in and out of your account and how much you have left over to save at the end. From here you can look at the things that you spend money on that aren’t necessary and cut down on these expenses.
Keeping the money that you save in a high interest savings account is another tip to help you reach your goal faster. By putting your savings in the right account you will be making your money work resulting in money for nothing at the end of each month. The more you put in the more interest you’ll earn so try to keep all you savings in one place.
If you need a home loan in a hurry, or don’t think you will be able to save the required deposit amount, there are some other options you can consider. Asking a parent or family member to go guarantor on your loan can put you in your own house faster.
It is however, a big commitment on your family member’s behalf as if you are not able to pay off the loan their house will be repossessed by the bank. For this reason you should consider this option carefully before using it as a solution to the no deposit problem.
If you own another property you can also consider using the equity you have built up in this loan to borrow for another house. Depending on how much of the previous loan you have paid off this can be a good way to overcome the no deposit barrier.