Buying a property could be a daunting and exciting experience. A good Mortgage Broker will use their expertise to guide you and manage the process through to settlement.
At Sydney Mortgage Options, we’re here are to help you find a property within your price range, arranging your finance, providing local market reports and assisting you with your conveyancing matters.
We’re here to help make your property dreams become a reality.
There are certain factors to take in to consideration when buying a property!
HOW MUCH DEPOSIT DO I NEED?
A straight forward purchase without involving Lenders Mortgage Insurances is 20% of the property’s value. In other words, borrowers will need a loan-to-value ratio (LVR) of 80%. Low deposit loans come with an LVR of 95% – 98%. This means you can purchase a property with just a 5% deposit.
An example would be: “If you’re buying an $700,000 property, a 20% deposit is $140,000. A 5% deposit is just $35,000.
That’s a big difference! But keep in mind with a low deposit loan, Lenders Mortgage Insurance (LMI) will be required. Depending on how much you’re borrowing, this can be a substantial cost which varies from several thousand dollars up to ten or even twenty thousand dollars. You can capitalise your LMI, meaning you can add this cost into your borrowing amount. But keep in mind this can affect how much you can borrow.
COSTS INVOLVED IN PURCHASING A PROPERTY?
When calculating the amount required to purchase a property, don’t forget to include fees such as stamp duty, conveyancing fees, pest and building reports and transfer fees.
DOES A NO DEPOSIT HOME LOAN EXIST?
Banks won’t allow you to borrow 100% of a property’s value, but there are some exceptions to this rule. These exceptions could be very useful for borrowers who are having trouble saving a deposit.
• EXISTING PROPERTY – If you already have equity in your family home, you could use this to secure the purchase for your next property. This lets you borrow 100% of the purchase price of your new property without having any savings. You could also cash out more equity to cover the costs associated with the purchase such as Stamp duty and legal fees.
• GIFTED DEPOSIT– if you are lucky enough to receive a non-refundable gift deposit from a relative, this could be used as part of the deposit. If you’re able to reduce your loan amount to borrow 90% of the purchase price, certain banks won’t ask you to prove the genuine savings. This means your relative would need to come up with 10% of the purchase price and only provide evidence for funds to complete the purchase.
• GUARANTOR LOAN – If your parents own a property with enough equity and are happy to act as guarantors, you could borrow up to 105% of the purchase price to cover the deposit and other associated costs. Essentially, the bank takes a guarantee from your parents that is secured by the equity they have in their own property. Just be sure that you and your parents understand all the implications of becoming a guarantor before entering into this type of agreement.
If you’re not working with a good broker, call us today on (02) 8093 0840 and let us help you achieve your property goals. We are available 7 days a week for your convenience. Ask@sydneymortgageoptions.com.au