No Deposit Home Loans Normally Require a Guarantor
Follow this link if you are an investor with existing property and looking for 100% investment loans .
The Global Financial Crises was sparked by the US Sub-Prime Crisis ie: lending to people who had no deposit. Almost all lenders use one of one of only two insurers and while things have improved the insurers are very strict when it comes to this type of non-prime lending.
Remember the LVR (loan valuation ratio) is based on the purchase price written on the contract of sale - not the total cost which includes stamp duty and then there is LMI (lender’s mortgage insurance) so if you have no deposit at all then you need 100% plus costs ie: approximately 108% and no one is going to offer you that unless…
There is a way to borrow without any deposit
If you do not have any existing property then the only way to borrow 100% of the home loan amount plus all the costs is where a family member (usually parent) as guarantor can offer a suitable security property as part of the home loan, these loans are sometimes called ‘family equity’ etc – as long as the offered security brings the overall borrowing down to below 80% then there is no genuine savings requirement and no LMI payable potentially saving you thousands of dollars. If your guarantor only wants to offer 10% security then with a limited guarantee this can remove the need for genuine savings however some LMI will be payable but substantially less than without the guarantor.
So if you don’t have a deposit or a guarantor I am afraid that 100% home loans are like the Tooth Fairy, a mythical memory from the distant past.