Can I get a mortgage with a low deposit?
The standard deposit for a home loan is 10-20% of the total cost of a home, but this does not mean you cannot get a mortgage with a low deposit. A low deposit is a deposit under the average and accepted 20% deposit value. Some lenders offer mortgages with as little as a 3% deposit. Not everyone has the funds or the time to save for a 20% deposit.
For example, if you want to borrow $500,000 to purchase a home, this means that the mortgage lenders expect at least $100,000 for a deposit. There are lenders that will accept less, as less than 3% if the borrower is eligible. These lenders are rare as many accept 5% as the minimum. Having a good credit report, and consistently high income can help you get a low deposit loan.
The problem with low deposits is that with most lenders, a low deposit fee is required. This fee goes towards your deposit and is non-refundable, but shows you have the funds to repay your loan. Another problem is that the lower your deposit, the higher your repayments.
Mortgage and Low Deposit
Mortgages are not impossible with low deposits. Many lenders offer affordable mortgages and low deposit options, especially for first-time homeowners with minimal savings. It is not easy to save 20% on a home, especially since the cost keeps rising, making it impossible to budget.