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No Deposit Home Loans & Welcome Home Loans. Do they still exist?
100% Home Loans and 100% Welcome Home Loans, are they still available?
The most common enquiry we get is asking how to apply for a home loan with little or no deposit or vendor finance. Many clients recall a number of years back when every bank seemed to have a no deposit home loan and in fact some bank’s had up to 105% options!
Of late we have had increasing enquiries regarding buying a home with a 100% finance, gifted deposit and also vendor finance from family, friends or a supporting landlord.
Now the only 100% product that we were aware of, on a stand alone basis, was the Governments Welcome Home Loan. Even this has now changed and requires a 10% deposit. There are also income and maximum loan amounts on this product. We are now helping first home buyers with Welcome Home Loans, but most of our clients seem to be outside the qualification guidelines. We can give you some easy to understand advice though on this.
NOTE: Sometimes you can access funds in your KiwiSaver account to assist with a deposit. It is important to realise though that this may have an impact on your longer term savings. This should be discussed with your KiiwiSaver provider or Authorised Financial Adviser. As a Registered Financial Adviser I am unable to advice on investment products.
So, with regards to home loan options, the most common enquiries and solutions are a follows:
“We have found the perfect house and we were just planning to start saving, but now want to buy with no deposit”
The first thing is to check if you have funds that can be accessed in your KiwiSaver, if not, or these are insufficient, you will need the help of family or friends, either through a gifted deposit or by them providing additional security for the lender and becoming guarantors. Both of these are serious commitments by a family member and / or friends and independent advice should be sought from a solicitor or trusted professional. If you have someone who is able to help you, the next step is to contact us and we can help you. Our online enquiry form can be used to get a quick idea on what may work for you.
“We have some savings but our bank will not help us and we have been customers for years! They say we need a 20% deposit!
Ideally 10% deposit, of which 5% is your own savings, is the minimum required to apply for a home loan, if you are a little short, once again check to see if you have funds available in your KiwiSaver. To get to 10% you may need a little help from a family member or friend as referred to above. Just remember non genuine savings from sale of a car, a personal loan, a gift, or guarantor are all possible, providing your other personal details are strong, such as occupations, credit ratings, account conduct, plus you have 5% genuine savings.
You may think there are no more options but contact us, as we make it our business to know what loans work with which lenders!
Some guidelines for you to think about if you want to apply now, or maybe you have to wait a few months.
1/- Have you been working for the last 12 months with the same employer?
2/- Do you pay your credit card and any other commitments like HP and rent on time, each month.
3/- Do you make sure that your bank account does not go overdrawn and have any honour or dishonour fees?
4/- Is your reason for having little or no savings your current lifestyle? Check your statements to see how much money you spend on coffees, lunches, entertainment, takeaways, bars and restaurants?
5/- Have you got too much debt already, car loans, HP and credit cards which have continual high debts on them. These items can all severely impact on your ability to buy a first home, perhaps you need to rapidly pay off some debts first, so you develop the habit of budgeting and saving.
6/- Know where your money goes, do a detailed budget. If your rent is currently $350 per week and you know that your mortgage may be closer to $500 per week, how will you find the extra $150? Best idea is to start saving at least that amount weekly as soon as possible.
So whilst the good news is that there are ways to help you buy a home with little or no deposit, it can be difficult and lenders are really careful who they lend to.
Keen to find out more? Just contact us by phone or our online enquiry form.