Low Deposit Home Loans: Some Crucial Points to Remember

0
699

Buying your dream home is a thrilling experience, and everybody wants a home sooner or later. But, for many, saving up for a big purchase amid other expenses is difficult. It may take them many years to save money for just the initial deposit and enter the real estate market. This is why many financial institutions now offer low deposit homeloans for those who cannot afford to pay a huge amount for their real estate purchase.

You will be astonished to know Australia’s housing market’s value. The housing market of the country is now worth $10 trillion. The average price of a residential dwelling in the country is between $941,900 and $925,300. 

Housing prices increase annually, and financial institutions come into play when people cannot afford to buy their desired property. You can choose from different types of loans and all of them have their benefits and limitations. 

If you are looking for the right loan to purchase your dream home, you have come to the right place. Also, per the Australian Bureau of Statistics (ABS), the value of the country’s residential rose by $221.2 billion in March this year. You cannot see anyone who can afford a house in the country without earning a good amount of money.

The article specifies the meaning of low-deposit home loans and their benefits. Several banks and financial institutions offer this loan, which is similar.

What is a low deposit home loan?

These kinds of loans are also called high Loan to Value Ratio loans. Banks and lenders provide low deposit loans to people who want to buy their property with a 5 to 15% deposit, making the loan more than usual. Now, you might be thinking, ‘when banks can offer loans up to 95% of the property value, why would someone take a loan for just 15%?’ If you have this doubt, it’s normal. People prefer to pay the deposit of 15% and take a loan for the same amount because they want to avoid the risk of taking a huge loan. For the same reason, potential borrowers are carefully analysed and then only they are given the loan offer.

Who are suitable for this offer?

People suitable for this type of loan are:

  • First-time buyers
  • People with a small budget
  • Who doesn’t have the required 20% deposit amount
  • People who are low on funds but have a good credit score

What are the benefits of applying for a low deposit home loan?

Applying for this kind of loan is not a walk in the park. But, with a good credit score and background record, you will become eligible for low deposit home loans.

The benefits of this loan are:

A deposit of about 5% of the property value is the minimum you need to pay. That means you will take $25,000 against a value of $500,000 (for example) to apply for a loan and get the property.

It offers more agility for borrowers to save on repayment and other expenses. This is the first step of owning a house.

Borrowers can get a guarantor. You can use your parent’s or relative’s home as security for a loan is an excellent way to quicken your loan application process and get the lender’s attention.

These are the benefits of opting for low-deposit home loans.