Three tips from Marissa Schulze, mortgage broker, property developer and director of Rise High Financial Solutions.
Tighten up your spending
The most important thing for applicants of low deposit home loans is to review their living expenses and if they can, to tighten up their spending. Applicants should rein in their spending for the six months prior to applying for the loan.
Genuine savings and rental history
Some lenders like to see "genuine savings". That means the applicant has been consistently saving each month or fortnight to build up their savings bucket. If that's not the case and they've been given the deposit as a gift from parents then lenders often want to see that sum of money sitting in the applicant's account for three to six months before applying.
If the applicant is renting they can actually prove they have good rental history and use that to boost their application in place of genuine savings. Now that really only works for applicants who are actually renting through a property manager. Sometimes applicants renting from a private landlord will find that hard for the bank to accept. The banks trust the feedback from a property manager more than they would from a private landlord.
Don't make any big changes between pre-approval and settlement
Make sure your financial circumstances don't change from the time you apply for finance to at least settlement. A common mistake is that buyers get pre-approval and then quit their job or apply for a car loan or increase their credit card limit. People don't realise how that impacts their application. You need to keep your financial and employment situations stable from the time you apply until you settle and move in. Then you can do what you like.
We want to buy our first house and we have 5% of the deposit for a house of 450000. We want to know what we must do to enter the government program of the first 10,000 buyers of the year 2020 and not pay the LMI. Could you guide us on how to buy the house to be considered in this program? what to do and how?
Hi Armando,
Thank you for contacting Finder.
Yes, the First Home Loan Deposit Scheme can help you to avoid the Lender’s Mortgage Insurance (LMI) as if you only have 5% for the deposit, the government will guarantee you the 15%. You can check the FHLDS requirements and how you can apply for FHLDS for more details.
I hope this helps.
Please do not hesitate to reach out again to us if you have additional questions.
Cheers,
Ash
If pay 20% deposit, does it need to look at income?
Hi Andrew,
Thanks for contacting Finder.
Yes, when you apply for a home loan, most lenders will have to look at your income. They are interested in how much you make and how likely you are able to repay your loan and manage all your obligations every month.
Please review our guide about applying for a home loan as well as the documents needed for a home loan. Once done, you may refer to the table above to compare low deposit home loans. When you are ready, press the ‘Go to site’ button to apply.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
I hope this helps.
Kind Regards,
Faye
looking to buy a country farmlet between5 to 10 acres with a 4bed dwelling and much shedding , property located in country Victoria and I only have 5% for deposit. Could you direct me to institutions that could provide finance just under $300.000
Hi Santo,
Thank you for reaching out to Finder.
The page we are on offers lenders that you could reach out to specific to the loan you are requesting but for the property you are looking for you may want to reach out to a real estate specialist who can further assist you in locating that type of property. You may also reach out to a mortgage broker who can assist you in providing lender options. Hope this helps!
Cheers,
Reggie
I own my unit (will rent the unit at $600 a week) and a 3-bed house rented for $360 (all fully paid). I have part pension. I would like to buy a unit near my children. Can I get a loan on my properties, rent, and pension to more than enough to pay for a mortgage?
Which lender should I approach?
Thank you.
Hi Maria,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Since you own a few properties, you can opt for a reverse mortgage. This type of loan allows you to borrow equity from your property and spend it on a new home. If this interests you, you can use our comparison table to compare your options. You can compare your options based on the interest rate, application fees, and ongoing fees, to name a few.
Alternatively, you can also check our pensioners home loan guide to learn more about how to get a home loan while you are on a pension. On that page, you will learn more about the considerations when applying for a home loan on a pension, what types of home loans might be available to pensioners, and how to compare home loans, to name a few.
Finally, please speak to a mortgage broker. They have the necessary knowledge and experience to help you explore your options. They will also take into consideration your whole situation before giving advice.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
We have almost paid off our home in SE Brisbane (have about $10,000 to go). We are both aged pensioners with no savings as such. We are considering moving to a new place but want to build rather than buy a pre-existing home, as I did 30 years ago. One idea I had was to rent out our existing house and use the rent to pay off the new one if the bank will let us and taking into account what Centrelink says about it. Otherwise we would have to juggle contracts around selling and moving. Can we get a loan to buy a new place before our old one is sold if we go that way? I think they used to be called Bridging Loans?
Hi David,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Interesting thoughts and questions you got there, David. As for now, if you are planning to get a loan or what you mentioned, bridging loan, one of the main criteria lenders will look at is your source of income. There are not a lot of lenders who lend money to aged pensioners. However, there are still those who can help. If you want to know how to get a home loan while on an aged pension, please refer to our guide on pensioner loans.
It is true that you can rent out your existing property and the money you earn from it can also be considered by the lender and will increase your chance of getting approved.
Regarding your last question, a bridging loan can be a good option while you wait for your property to be sold. Since your main source of income is coming from Centrelink, you might have limited options. However, you can still give it a try. On the page I just gave you, there are lenders listed that you can compare based on the interest rate, application fee, and monthly payment, to name a few.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
Finally, please consider speaking to a mortgage broker. They have the right knowledge and experience to help you explore available options.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua