10 Oct 2021

How Can I Get a 100% Home Loan?

Home Loan

There used to be many ways Australians could get a 100% home loan. However, nowadays, fewer lenders offer a variety of 100% home loans. The only way to borrow 100% today is with a guarantor. Guarantors are usually family members who own their own property, which can be used as loan security and as part of your loan deposit. with There used to be many ways Australians could get a 100% home loan. However, nowadays, fewer lenders offer a variety of 100% home loans. One way to borrow 100% today is with a guarantor. Guarantors are usually family members who own their own property, which can be used as loan security and as part of your loan deposit. The other way is to request a higher rate “top up” loan to bridge the deference in required deposit as a 2nd mortgage while you wait for the property to increase in value or paydown faster. Mortgage House would then try to refinance both loans into a single lower rate loan in the future.

Basics of a 100% Home Loan

Guarantors provide security for your home loan. What this means is that if you are unable to make your loan repayments or go into default, your guarantor may be on the hook for the rest of the loan amount. They run the risk of losing their property if they cannot afford the repayments either. There are some ways to minimise the risks to your guarantor. For instance, your guarantor can guarantee a portion of the loan. Once that portion has been repaid, or the borrower has equity in their property, the guarantor’s property is safe.

With a guarantor, you can borrow up to 100% of the property value. However, some lenders may allow you to borrow 110% of the value, covering stamp duty costs and other costs, such as moving. 

Benefits of a 100% Home Loan

Securing a guarantor allows you to borrow 100% of your property value, which enables you to enter the property market sooner than you would be able to otherwise. It also enables you to avoid paying Lenders mortgage insurance. LMI kicks in if you borrow more than 80% of the property value. Finally, securing a guarantor improves and strengthens your loan application, increasing your chances of being approved. 

If you are interested in applying for a 100% home loan, the lending specialists at Mortgage House can help.

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