MyRate Education Centre
No Deposit Home Loans
Nowadays there is pretty much no such thing as a no deposit home loan.
This is because one major catalyst for the global financial crisis was that lenders were loaning money to high risk borrowers, who were unable to make their repayments.
A no deposit home loan is a very high risk product for lenders. The following scenario demonstrates why:
- lender loans 100% of purchase price;
- the home owner is unable to meet the repayments;
- the property market decreases in value;
- the lender repossesses the property but is unable to sell it for the purchase price and therefore cannot recover the money they originally lent.
As a result, most lenders will now only lend a maximum of 90%-95% of the purchase price.
What deposit do I need to get a home loan
For most lenders, you'll need a minimum deposit of 10% consisting of 5% genuine savings (the remaining 5% can be FHOG or a gift).
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