First Home Buyer Loans
This guide has been designed to help you take the first step to owning your own home.
These loans are suited to borrowers, including first home buyers, with limited savings, or those wishing to use money not sourced from their own savings as a deposit. For example, this money may have been a gift, an inheritance, obtained from another loan, or government grant such as the First Home Owners Grant (FHOG)
As a general rule first home buyers will need around 5% deposit that has been genuinely saved just to get their loan approved however we do have a lender that will lend to 95% + Mortgage insurance of property value without Genuine savings and standard lenders that will lend to 90%of property value without genuine savings.
What is Genuine Savings?
Lenders like to see a borrowers’ history of savings – normally the minimum is 5% of property value and they like to see this saved over a minimum of 3 > 6 months.
The following types of savings are considered to be genuine savings.
- Savings held or accumulated over 3 months.
- Term deposits held for 3 > 6 months.
- Shares or managed funds held for 3 > 6 months.
- Some funders will consider rental history as part of genuine savings.
What are the options for low deposit loans above 90% lvr with Genuine Savings?
- 5% Genuine savings will allow you to borrow to a maximum of $750,000 to 95% of Property Value + Mortgage Insurance.
What are the options for low deposit loans above 90% lvr without Genuine Savings?
- Will allow you to borrow to a maximum of $500,000 to 95% of Property Value + cap full mortgage insurance cost.
What are the options for no deposit loans and No Genuine Savings?
The only option would be a family guarantee loan. This is where a new loan is arranged for 80% of property value and a limited guarantee loan is arranged on a family property for 20% + costs which would allow you to borrow up to 105% of property value.
- Applicant must be able to service both loans.
- Guarantor will need to be able to service limited guarantee incase guarantee is called on and must have at least 20% equity left in property after the guarantee loan is added. Guarantees’ security can be an unencumbered property or as a second mortgage with some lenders.
The Guarantee can be removed when loan amount does not exceed 90% of property value (with mortgage insurance) or 80% with nil mortgage insurance to pay. Guarantee can be borrower’s parents, with some lenders considering guarantees from immediate family members such as siblings, grandparents, spouses, de facto partners or adult children.
Guarantor loans have several benefits:
- Save money by avoiding Lenders Mortgage Insurance
- You do not need genuine savings.
- You do not need a deposit, allowing you to buy a home now
What do lenders look for in Low Deposit First Home Owner Loans?
- Stable employment: In most cases you must have been in your current job for 12 months.
- A good income: Lenders look to strong employment in a stable industry
- Reasonable asset position: Your asset position relative to your age & income is important to lenders and as such the combination of your current debts e.g credit cards, personal loans, car loans should not be more than your genuine savings to put you in a negative position
- Rental History: Funders will require copies of rental history to see that commitments can be made on time
- Security: Funders and Mortgage insurers will want property to be located in Capital City or Major Regional area in good condition.
- Clear credit history: Must have a clean credit file with very few enquiries and with no arrears on your bills such as rent, credit cards, personal loans and other debts
We have mortgage brokers that specialise in First Home Owner Loans. Please complete our Express Enquiry Form or Phone Direct and you can discuss your situation with an expert. If you wish to proceed, then we will help you to complete all the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your home loan application and the on-going communication between all parties until your home purchase is settled.