Are You Eligible for a Low Deposit Home Loan?

Homeownership is a goal that most of us strive for. But saving enough money to buy your first home can seem overwhelming when you’re also paying rent and you’ve already cut down your living expenses as much as possible. Luckily, there are solutions out there – especially if the only thing holding you back from owning a home is not quite having enough cash in hand just yet.

It’s no secret that most lenders don’t offer true “no deposit” home loans. However, there are a few options available, provided that you’re able to meet the strict criteria for eligibility (which includes an almost unblemished credit score and very steady employment history, not to mention an expensive interest rate).

Low deposit home loans are a far more popular option, as they are much easier to meet the requirements for. Let’s address the elephant in the room – yes, it’s possible to get a home loan without putting down 20% of the property value upfront. In fact, some lenders offer loans of up to 95%, so you might be more eligible for a low deposit home loan than you thought!

How do low deposit home loans work?

Whether you’re located in Melbourne, NSW or elsewhere in Australia; low deposit home loans allow you to get your foot in the door (literally). The “loan to value ratio” refers to the amount an applicant borrows from the bank, relative to the overall property value of the home they are purchasing.

The higher your loan to value ratio (LVR), the bigger risk the lender is taking. If your LVR is greater than 80% (meaning you wish to borrow more than 80% of what the property is worth), there’s a good chance your lender will charge Lenders Mortgage Insurance (LMI).

This protects the lender in the event that you’re unable to make repayments on the house. While no one wants to pay LMI of course, it isn’t necessarily a bad situation for first homebuyers with a low deposit to be in.

Applying for a low deposit home loan for first home buyers

When seeking a low deposit home loan, the trick is to have good financial records, and a well-worded explanation (to both the lender and the insurer) for why you wish to buy a house with a smaller-than-usual deposit.

At BFG Loans, we know how to navigate these applications and secure a low deposit home loan with the best possible outcome. We can also help you prepare for the additional expenses that inevitably pop up when buying a home, so that you’re not caught off-guard or left short on funds.

There are other avenues that might be a feasible option, such as guarantor home loans, bad credit home loans, no LMI home loans and refinancing down the line.

Speak to a friendly and professional BFG Loans broker today

At BFG Loans, we’re committed to helping you secure a home, while securing one for a family in need at the same time. Once we’ve found the ideal low deposit home loan for your individual circumstances from the 35+ banks and reputable lenders we work with; we contribute 50% of our profits to affordable housing for families in need.

It’s all part of our mission to create a better future for our customers, communities and the planet. To speak with one of our brokers about your options today, get in touch.

Hear from others how BFG is making a difference

We are so happy to have been able to work with Sam at Benevolence Financial Group on bringing our home ownership dreams to life. As first home buyers we had no idea what we were doing and whether we were even in any kind of position to purchase. Sam explained everything and patiently answered our many questions, talking us through every step of the process.

Jen

Highly recommended. Sam and his team are a highly professional group who helped us with a refinance. They were attentive, proactive, and knowledgeable in their service as they guided us through the transition.

Oliver

Sam from the BFG looked after myself and my Fiance when we got our first home purchase. Sam was very down to earth, professional and really went above and beyond to help us every step of the way. He helped us, offered us support and made sure we get through things very smoothly. he answered all our questions and was always available to chat, was very proactive and always had the answers.

Reta

I can’t recommend enough Sam, he’s caring, savy, organise, responsive and very knowledgeable, Sam really care about you and he will always procure to get the best outcome for you. Thanks so much for your help Sam, I can’t thank you enough.

Patrick

We met with Samuel and right from the start he listened to our goals and got us meeting with the relevant people. He was extremely proactive and found lenders to say yes when our current said no. Have used him many times and would recommend him to any small business owner who is trying to get ahead and set up an income for their future and future family. Look forward to continue to working with him and his team

Andrea

Samuel has been incredibly helpful guiding us through our first home purchase. He’s been incredibly patient, very responsive, and got us a great deal on our mortgage. On top of all that, his business model is geared toward socially responsible and ethically minded businesses/banks – something we really valued. It’s great to know our investment is doing something great for us, but also for others and the world. We would highly recommend this business and specifically Samuel, he’s just an absolute legend!