No deposit home loans, no interest loans, loans of up to 105% - if this is what’s happening out in the world of first home buyer mortgages, why are there still so many people struggling to get into their first homes.
The fundamental truth of the matter is that there is a variety of options out there if you know where to look. While this article focuses on home loans, there are many other factors effecting first home owners gaining entry into the housing market, we’ll touch on these in later articles.
NO DEPOSIT HOME LOANS
A Deferred Deposit Agreement can help see you into your first home via an agreement with the vendor or builder, to virtually grant your deposit as a loan and stretch the repayments over a five-year period. This is particularly viable for first home owners eligible for the First Home Owners’ Grant (FHOG) and struggling to save a deposit.
Another option is to seek out a guarantor, usually in the shape of a family member. Once again, these types of loans are most suitable for first home buyers eligible for the FHOG.
Of course, there are pitfalls. Under a Deferred Deposit Agreement, you need to be sure you are going to be able to meet those extra repayments you will be making over a five-year period to repay the deposit loan. Your FHOG can bring these repayments down or shorten the repayment period by up to 50%, so that’s the good news. The difficulty may be finding a lender who will loan you the funds under this arrangement, but they are out there.
More good news is that no deposit loans don’t necessarily attract higher interest rates. Many of these loans are offered by lenders who are wanting to increase their share of the market. Your best chance of securing one of these types of loans is to go through a mortgage broker savvy with first home buyers and the options out there. A good place to start isn’t necessarily the internet, phone about, your local banks and mortgage brokers are best a first, but remember, loans can be with banks and financial institutions anywhere, ultimately, your options are endless.
If you do have a guarantor, think about borrowing 105%. The extra 5% will help you cover those extraneous costs like stamp duty. Keep in mind though, should you default on your loan, your guarantor is going to have to pay it back 100%. Now you don’t want to see mum and dad losing their house over your unfortunate circumstances, so be absolutely sure this is the right avenue for you.
It’s a bit of a quagmire when it comes to home loans, there is so much to think about and so many different avenues. It is best to seek the advice of a professional when trying to navigate this tricky road map, best advice is to contact your local mortgage brokers or us at Vendor knowing you will be pointed in the right direction and on the way to owning that property you’ve long dreamt of.