Low Deposit Home Loans: Making an Adjustment on the Down Payment
Saving for a down payment is a challenge. There are several individuals who continue renting because it takes time to save the deposit. The solution is low deposit home loans. These loans have a set of pros and cons, but at the very least, it helps more people get into homeownership and out of renting. Here are some things to know about the loan.
Become a Homeowner
First and foremost, this loan option moves a renter to a homeowner, which is beneficial. As long as the newly minted homeowner repays the mortgage on time every cycle, equity begins to accrue. That equity can later be leveraged to purchase a new home or take advantage of other financial instruments. This begins the process of creating wealth. As your financial situation improves, practicing fiscal responsibility gets the debt paid off sooner. Plus, it becomes more affordable.
Higher Interest Rates
Lenders request a 20% down payment so that the applicant has skin in the game. Homeownership is a responsibility. Lenders want to ensure that the applicant is going to fulfil their end of the bargain. Once you make higher repayments, the loan becomes more affordable and you build your credit history, which bodes well for future purchases. The process gives you street credibility because you are no longer seen as a high risk.
Low Deposit Home Loans Conclusion
Even though low deposit home loans are a tad expensive in the beginning, as your finances get in order, costs start dropping off. In the long run, it makes more sense to begin paying for your own home at a higher rate instead of continuing to rent. Our Mortgage House team is ready to walk you through the options. Plus, you have access to our free online calculators including the refinance home loan tool.