Low Deposit Home Loan: Who Qualifies and What is it?
Sometimes becoming a homeowner requires a trade-off. Those who have not saved 20% for a down payment have an alternate option. You can opt for the low deposit home loan because homeownership starts building wealth. Your rent payments go toward your property as opposed to someone else’s, which makes fiscal sense. There are some things to keep in mind. Let’s dig into this loan option.
Most applicants with an acceptable credit score can qualify for this mortgage. The target applicant does not have the 20% deposit available. Lenders prefer to fund applicants who make the deposit. It lessens the risk that the property will be abandoned. Thanks to technology, lenders like ourselves are able to assess every application on a case by case basis.
Our tools allow us to predict risk and balance it through other means.
Low deposit home loans incur a higher interest rate charge to offset risk. The situation still delivers a win-win for all parties. The applicant receives funding for the home purchase. At a higher interest rate, the lender is hedging their investment. It’s a trade-off for the new home owner and lender.
A mortgage insurance fee is placed on the loan, too, which increases the monthly repayment amount. There is the opportunity to pay it off sooner so the monthly repayment amount drops as well.
Low Deposit Home Loan Conclusion
The best way to find out if the low deposit home loan is best for your financial situation is to speak with our Mortgage House representatives. Every application receives proper consideration. Depending on the results, our team will walk you through those options. Our mortgage repayment calculator is available to you. It paints a picture based on deposit amount and potential interest rate.