Depending on your financial situation, you may have difficulty getting approved for a standard home loan. Lenders often require financial documents to verify that you have a stable income. They also look at your credit standing. These details may impact your ability to obtain a mortgage. If this is your first home you may get financial help from Government initiatives.
If you have no deposit, bad credit, or no proof of income, owning a home may still be an option. Consider one of the following types of home loans for your specific financial situation. Money Smart have a wealth of information which may be helpful if you are looking for a home loan.
No Deposit Home Loans with a Guarantor
Before applying for a home loan in Australia, the typical recommendation is to save enough money to cover at least 20% of the property’s total value. However, you may not need a deposit to secure a home loan.
There are companies which work with flexible lenders throughout Australia to provide clients with no deposit home loan options. A no deposit home loan is a loan that does not require the borrower to put down an initial deposit. With these loans, you may be able to borrow up to 100% of the property’s value.
Begin Comparing the Best Home Loan Rates
Compare your options for home loans using online lending services to get the best rates. You only need to enter a few basic details to begin comparing rates.
How can you get a no deposit home loan? You need a guarantor. In most cases, the guarantor needs to be an immediate family member, quite often a parent. If you are a resident of Queensland, you can find further reading here.
Keep in mind that a guarantor does not exclude the need to prove that you have a stable income. You must show that you can complete the monthly repayments with your income.
The guarantor also needs to have enough equity in their property to secure 20% of the value of the property that you intend to purchase. This equity is used as a replacement for the deposit.
The first 80% of the loan is in the borrower’s name, while the remaining 20% includes the guarantor. This limits the guarantor’s liability should the borrower fail to complete the monthly repayments.
Low Doc Loans for Self-Employed Borrowers
One of the most significant factors that lenders look at when approving or denying a loan and selecting an interest rate is the income of the borrower. When you lack the necessary documentation to verify your income, you may struggle to obtain a home loan. However, there are ways to get a home loan without this documentation.
When you are low on documents, you may qualify for a low doc home loan. The low doc home loans are primarily intended for self-employed individuals and investors. These individuals may not have the financial records that are typically required for a standard home loan.
Instead of supplying the typical tax records to verify income, these individuals can submit a declaration form to self-verify their income. The lender may also require bank statements and recent business activity statements to help establish a record of income.