15 Sep 2022

Do Banks Lend 100%?

Banks and Homes

Hypothetically, banks are capable of lending 100% home loans and mortgages, however, a borrower will find 100% loans exceedingly difficult to gain approval for. Banks view 100% loans as a high-risk move that can potentially harm both borrower and lender and generally require a minimum 5% deposit. In addition, 100% loans have incredibly high-interest rates that can negatively impact homeowners’ financial situations and goals. There is currently only one Australian bank that offers 100% home loans, but the chance for approval is low even with the added security of a potential guarantor. 

Most banks and lenders do not offer 100% home loans because the risk is just too high. If a borrower’s financial situation cannot meet the necessary mortgage repayments they are subject to facing foreclosure which can seriously damage credit scores and the chances of a borrower gaining approval for another home loan in the future. 

100% loans are not the best way to gain funding for purchasing a home! First-time homebuyers may be eligible for the First Home Owner Grant Scheme or the First Home Loan Deposit Scheme. The First Home Loan Deposit Scheme allows eligible first-time homebuyers to purchase a home with just a 5% deposit and cuts the Lenders Mortgage Insurance requirement. The First Home Owners Grant Scheme offers a tax-free $10,000 grant to eligible first-time buyers to help with home buying costs without needing to worry about repayments. 

At Mortgage House, our lending specialists are experienced in helping Australian first-time home buyers to achieve their financial goals, find the best interest rate, and apply for home loans successfully. 

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