Not having money in the bank can keep several people from attempting to apply for a loan because they know that their chances are slim. Lenders are not going to waste their time with them because they don’t meet one of the most important requirements for approving loan applications.
While it is true that you need to have some cash saved in the bank to qualify for a loan, it is still possible for you to borrow money by taking advantage of a no deposit home loan. You should be able to find lenders that are going to help you qualify for this.
What is this home loan? A no deposit loan will allow interested homeowners to borrow up to 100% of the property price. They do not have to pay deposit, which is typically 20% of the house price. With this, you do not have to spend a lot of time waiting until you have saved enough money in the bank. If you want to buy a house right now, you can do so with this type of loan.
There is just one downside, though. This kind of loan is not as common as it used to be because of the global housing crisis that affected a lot of countries several years ago, some lenders have become a little bit worried about letting people borrow money without any deposit. But that does not mean they are gone for good. You can still find lenders that are willing to work out something to help you out.
You have to know that this may not be as easy as you think because lenders need to make sure that you are not going to cost them money. You are considered a high-risk borrower, meaning you have a big chance of defaulting on the loan. And if you can’t prove to them that the loan is going to be repaid, they may not be able to do something to help you.
As scarce no deposit loans are, you will be able to find one especially with the help of a very good mortgage broker. One of the first things you need to do is look for a mortgage broker. A broker is an expert on this. He or she will help you arrange everything so you can take out a loan. More importantly, they know a lot of lenders. They will be able to lead you to the right door. So make sure that you have a broker first. This should make your life a lot easier.
If you want to borrow more than 80% of the property value and not have any money for deposit, you have to prove to lenders that they are free from risks. Having someone to guarantee your loan is a great solution. It could be anyone. Most people use their parents as guarantors. Parents are the perfect guarantors because lenders know that they will always be ready to help out their kids. But it does not mean other people, like relatives can act as guarantors.
This works by using their property as a security for the loan you are trying to obtain. This means the house needs to be paid for already. But in the case the parents are still repaying the loan, they can obtain a second mortgage.
When you have someone to guarantee your loan, lenders will be more lenient and waive the need to pay for deposit. They may even waive lenders mortgage insurance. That’s great because it would mean more savings for you.
So don’t worry if you do not have any cash in your savings account. You can still buy a house by taking out a no deposit home loan.