Most traditional home loans require a deposit of between 5% and 20% of the property’s purchase price as a down payment. However, other alternatives don’t require prepayment. No-deposit home loans are designed for buyers who may not have enough for a deposit but still have the financial capability to repay a mortgage.

That being said, finding 100% no-deposit loans are difficult to find these days. Therefore, we’ve listed other popular options to secure a property without paying a large deposit upfront below.

• Guarantor Loans

  Guarantor loans are the preferred alternative for those looking to buy a home without the traditional deposit. Here, a family member—usually a parent—uses their property as security for your loan. Such mortgages let you borrow up to 100% of the purchase price, removing the need for a deposit.

  • Pros:

    • No deposit is required
    • You avoid Lenders’ Mortgage Insurance (LMI) costs
    • Faster homeownership without years of saving

  • Cons:

    • Puts financial pressure on the guarantor
    • If you default, the guarantor’s property is at risk

• First Home Owner Grants and Government Schemes

  The Australian government also offers many first-home buyer schemes that can significantly reduce the deposit required. These include:

  • First Home Owner Grant (FHOG)

    Eligible first-time buyers in Victoria can receive a $10,000 grant for purchasing a new home. This also applies if you’re building a new house worth $75,000 or less.

  • First Home Guarantee (Formerly FHLDS)

    This initiative allows eligible first-home buyers to purchase a property with deposits as low as 5%, minus LMI.

  • Victorian Homebuyer Fund

    It is a shared equity scheme where the government contributes up to 25% of the property value, reducing the amount you need to borrow. Like the First Home Guarantee, it brings the payable deposit down to 5%.

• Low Deposit Home Loans

  If a no-deposit loan is out of the question, consider a low-deposit home loan. Some lenders offer first-home buyers mortgages with deposits as low as 5%.

  • • Key Considerations:

      • You may still need to pay Lenders Mortgage Insurance (LMI)
      • Interest rates may be higher than standard loans
      • A strong credit history and stable income are required

• Using Your Superannuation

  The First Home Super Saver Scheme (FHSSS) allows first-home buyers to withdraw voluntary super contributions (up to $50,000) to use as a home deposit. This can be an effective way to save for a property while benefiting from tax breaks.

  • • Pros

      • Boosts savings faster
      • Tax benefits make saving more efficient

    • Cons

      • Superannuation funds are meant for retirement
      • Limited to voluntary contributions only

• Buying with a family member or partner

  If you’re struggling to buy on your own, consider co-buying with a partner, sibling, family or close friends. This allows you to combine savings and income, making it easier to qualify for home loans with lower deposit requirements.

  • • Things to Consider

      • Have a legal agreement in place to outline ownership percentages
      • Be clear about financial responsibilities and exit strategies

• Rent-to-own Agreements

  Last but not least, you have the option of a rent-to-own or vendor finance agreement. This allows you to rent a home with the option to buy it later on. How it works is a portion of your rent goes toward the property purchase.

  • • Pros

      • No large deposit is required upfront
      • Builds equity while renting

    • Cons

      • Higher costs than traditional methods
      • Risk of losing payments if you don’t purchase

If you’re pursuing no-deposit or low-deposit home loans, here’s how to improve your chances of approval:

• Improve Your Credit Score

  Lenders favour borrowers with a strong credit history. Therefore, you should pay attention to improving your credit score by making on-time payments, reducing debt, and avoiding excessive credit applications.

• Have Stable Employment

  A consistent income shows lenders your ability to repay. Make sure your employment details are made available as and when required.

• Reduce Existing Debts

  Pay off personal loans and credit card debt to improve your borrowing ability.

• Show Savings and Good Financial Habits:

  Even if you do not have enough for a full deposit, demonstrating responsible financial habits can help you land a good deal.

Saving up for a traditional deposit can be tough. Fortunately, there are multiple options for buying a home without one. Whether it’s through a guarantor loan, government support, a low-deposit home loan, or other strategies, buyers have several options to get into the property market.

Before committing to a no-deposit mortgage, consult our experts to find the right solution for your situation. 7 Mortgages is a leading mortgage broker in Melbourne, with access to various packages. We make home ownership affordable and more accessible to all buyers. So, don’t worry about large upfront deposits. Instead, call us on 03 9544 2642 / 0413 277 413 or email us at admin@7mortgages.com.au to find out how we can help.

Mortgage brokers play a crucial role in facilitating the home loan process, and their responsibilities directly contribute to simplifying the loan application experience for borrowers. Here’s how:

• Single Point of Contact

  Instead of approaching multiple lenders yourself, the broker acts as your intermediary.

• Tailored Advice

  They review your financial position and provide personalised recommendations based on your eligibility and preferences.

• Reduced Paperwork

  Brokers gather and organise all the necessary documents, ensuring nothing is overlooked.

• Streamlined Process

  They know the criteria of each lender and prepare your application accordingly, reducing errors and delays.

• Time and Stress Savings

  By managing the end-to-end process, they help you focus on what matters—finding your new home.

When looking for a home loan, you may wonder whether to work with a mortgage broker or approach lenders directly. Each option has its advantages, but the former often provides added convenience, expertise, and flexibility. Here’s a breakdown to help you decide.

• Access to a Wide Range of Loan Options

  Brokers work with multiple lenders which means they can compare a variety of products to find the best fit for your financial situation. On the other hand, when you approach lenders directly, you are limited to the products offered by that particular lender.

• Personalised Loan Options

  A broker will assess your financial situation and recommend loan products tailored to your specific needs. Their advice considers your long-term goals and ensures you fully understand the terms of the loan. Lenders, however, only offer products from their own range and may not consider your full financial picture when recommending loans.

• Simplified Application Process

  Mortgage brokers also streamline the application process. They handle much of the legwork for you, from gathering the required documentation to submitting the loan application and liaising with the lender. In contrast, approaching lenders directly requires you to handle the application process on your own.

• Expert Guidance

  Brokers can guide you through options you may not find directly with lenders if you have a unique financial profile or require specialised loan products.

• Negotiation Power

  Brokers often have better negotiation power due to their established relationships with lenders. They can secure lower rates or exclusive deals that may not be available to the general public. When dealing directly with lenders, negotiation options are limited, especially if you’re a first-time borrower.

When choosing a mortgage broker, several key factors can significantly influence your experience and the outcome of your home loan application, such as:

• Experience and Track Record

  Look for a broker with years of experience and a proven history of helping clients secure favourable mortgage deals. An experienced broker will have the expertise to navigate complex loan options and market conditions.

• Industry Knowledge

  Ensure they understand the current mortgage market trends and regulations to offer the best advice.

• Client Reviews

  Positive client feedback reflects the broker’s reliability, professionalism, and success rate in securing loans.

• Range of Lenders Choose

  the one who works with a wide range of lenders. A larger network of lenders gives you more options to find competitive rates and loan products that suit your needs.

• Transparency in Fees

  A reputable broker will outline all fees and potential costs upfront. Ensure there are no hidden charges and that you fully understand their fee structure before moving forward.

• Personalised Service

  Look for a broker who understands your financial needs and tailors loan options that fit your unique situation.

• Communication Skills

  Opt for one who is easy to reach, answers questions promptly, and keeps you informed throughout the process.