🎁12 Days of B&W Finance - Day 6🎁
So, you want to purchase property but your deposit is lower than the average number of laughs at the comedy club on amateur night, what do you do?
Today on our 6th Day of our 12 days of coverage we’ll be talking about low deposits.
"On the sixth day of Christmas, Black and White Finance gave to me: Six low deposits,
- Five lenders lending,
- Four guarantors,
- Three construction loans,
- Two different rate options,
- And a head start on my first home"
How low can you go?
Low Deposits are an option customers can take which provides them with access to getting a deposit on a property with less than 20% of the total loan in savings.
Take Generation Y for example, fresh out of uni, have accumulated a boat-load of HECS debt, haven’t really had the chance to be working for long enough to have a good amount saved. Having a low deposit and still being given the green light seems like a Christmas miracle!
You could even have as little as a 5% deposit and still be approved!
Low deposits are popular amongst first home buyers and can directly tie in with the first homeowners grant (see day 1) and having access to a suitable guarantor (see day 4).
Here’s the low-down
Just like when you play limbo on a hot Aussie day at the beach during the Christmas break, sometimes you can’t go as low as you’d like…
Here are some requirements you’d need if you want to be eligible for a low deposit;
Minimum of 5% genuine savings must be held – Genuine savings are savings you have held/accumulated over 3 months.
No outstanding major debt – Having lots of credit cards or other large loans such as for a car or something similar will generally get your application knocked back.
Stable job security – Having been employed for a minimum of 6-12 months will look more favourable for you in having a low deposit, although we've had loans approved for less than this in certain situations - Even one day!
Strong base income – You must be earning enough to be able to pay your loan off as well as any additional bills/utilities. In lending talk this is known as your ‘serviceability’.
Property and postcode restrictions – It’s as the real estate agents say: location, location, location. When you have a low deposit there are certain areas which will either help or hinder your progress – generally it is more difficult to be approved in a higher density location, especially if they are off the plan.
Bank of Queensland, Virgin Money, and Bankwest are some of the lenders who can assist you in getting a loan under these circumstances, borrowing even up to 98% of the property value. However, please be aware that when you take loans out for more than 80% of the property value and do NOT have the first home owners grant or a guarantor, you will end up paying lenders mortgage insurance (see day 5) and rates are generally of a higher nature as a result.
Final Thoughts
When you have a low deposit there are plenty of options out there for you in the market and the great thing about them is – they aren’t exclusive to first home buyers either!
As is usually the case with these things though, everyone has a different financial situation so it is important you seek professional help in the form of a qualified broker to help you through the whole process.
Although, any way you look at this, buying a property with as little as a 5% deposit is a win if you can break into the current crazy real estate market.
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We’re also keen to receive your questions and if you want to know of some other great terms or rates on offer at the moment, and would rather email, please send a note to peter@blackandwhitefinance.com.au
* Your full financial situation would need to be reviewed prior to any acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria.