First Home Owners - No Deposit Home Loan Options
No deposit home loans are an ideal way for first home owners to enter the property market. The ever increasing prices of homes have made it difficult to save for a deposit as the amount required slowly but surely increase. This is where a no deposit home loan in combination with the first home owners grant can help you achieve the dream of owning your own home.
There are a number of no deposit home loans available to you with a wide choice of features including internet banking, redraw facilities, offset accounts and a choice of fixed or variable interest rates.
Choosing the right home loan for you is a matter of understanding your own needs and financial position, a great place to start is by contacting us and having a chat to a home loan consultant who will be able to highlight the different options available. Importantly we are able to provide you with a snapshot of the total costs involved with your proposed purchase and assist you with the first home owners grant as well.
Let’s have a look at just some of the options available to you as a first home owner, these home loan options are listed below:
It should be noted that with the Credit Issues being experienced Globally, Lenders know require applicants to show 5% genuine savings for any loans that are above 85% Loan to Value. Although Lending institutions will still consider applicants under a no deposit scenario, it is of utmost importance that you can demonstrate a 5% savings pattern over a 6 month period.
For further information we recommend, prior to any purchase that you obtain a pre-approval, ensuring that the Lender of choice is comfortable in providing you with the finance to purchase your First Home.
You can contact us for more clarification.
95% No Deposit Home Loans
As mentioned there are a number of no deposit home loans available to you, these home loan providers range from the major banks through to second and third tier lending institutions.
The choice is broad and the home loan interest rates are very competitive, with a choice of fixed or variable rates which are in line with traditional home loans which offer up to 90% lending on the purchase. We generally suggest to our customers that they select a fixed rate for a period of up to 3 years as this assist in maintaining a fixed repayment schedule and allows for easier budgeting of expenses. Given this is the first time that you would be repaying a home loan having a fixed repayment makes it much easier to forecast your expenses and ensure the repayments are made regularly without any shortfall.
90% Home Loans + Deposit Gap Loan
An alternative to a pure no deposit home loan is that of a traditional home loan which extends up to 90% of the purchase price and the addition of a deposit gap loan which can provide up to 5% of the properties value.
So what’s the benefit of choosing a 90% home loan versus a no deposit home loan? The benefit is in the fact that the mortgage insurance premium is lower. What this means is that the expenses associated with purchasing a property are lower as well, in addition to this you will also have 10% equity in the property from the outset.
Here’s how this type of scenario would look, firstly you obtain a 90% home loan, then a deposit gap loan at 5% which covers the cost of the property, and lastly the first home owners grant would go towards associated costs and may cover most if not all the out of pocket expense given the mortgage insurance premium is lower. Lastly if there is a shortfall, this can come as a gift or any other avenue.
To highlight in more detail how these two options would work we have tabled below two scenarios for your information. The figures applied are estimates and specifically in relation to mortgage insurance where each home loan provider has their own scale of fees.
| Scenario 1 300k Purchase in NSW – 95% No Deposit Home Loan + Deposit Gap Loan |
Scenario 2 300k Purchase in QLD - 90% No Deposit Home Loan + Deposit Gap Loan |
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| Property Price Stamp Duty Registration of Mortgage Transfer of Land Mortgage Duty Mortgage Insurance Application Fee Conveyancing |
$300,000 |
Property Price Stamp Duty Registration of Mortgage Transfer of Land Mortgage Duty Mortgage Insurance Application Fee Conveyancing |
$300,000 $NIL $120.50 $427.70 $NIL $4,935 $750 $1,000 |
| Expenses Sub Total | $307,788 | Expenses Sub Total | $307,233.20 |
| Less the below: No Deposit Home Loan Deposit Gap Loan First Home Owners Grant |
$285,000 $14,250 $7,000 |
Less the below: No Deposit Home Loan Deposit Gap Loan First Home Owners Grant |
$270,000 $13,500 $7,000 |
| Less Available Funds | $306,250 |
Less Available Funds | $290,500 |
| Total Out of Pocket | $1,538.00 | Total Out of Pocket | $16,733.20 |
Please note that the above figures are an indication only as there may be other costs associated with the No Deposit Home Loan chosen. In particular the Financial Institution you have applied to. Also note that Conveyancing, Application Fees and Mortgage Insurance are only estimates as these three areas will vary according to the Lender chosen and which Mortgage Insurer approves the Loan. Also note that you can negotiate your Conveyancing fees, and we have chosen a higher fee for these examples. |
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As you can see the first home owners grant and no deposit home loans are the ideal way for you to enter the property market although you can structure the loan in a different way with the deposit gap loan as well.
For more detailed information about your own specific needs please contact us and a home loan consultant will be able to highlight for you a financial snapshot and government fees and charges depending on the state you are purchasing in. You will also be provided with a number of options for your home loan and assistance with obtaining the first home owners grant.
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Useful Sites as a point of reference: |
| Web Designs & CRM Systems | FBAA | More info on No Deposit Home Loans | Other Home Loan Options |  |
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