Lenders look at your repayment records and your income to work out if you are able to service (make repayments) to the liability and not to put yourself into financial hardship.
If you are currently renting, and depending on the amount of rental you current pay, you may be able to service (pay) a loan facility and not know it. You may have a small amount of savings, which is no indication of your lack of ability of a financial commitment, the factor for no savings may be because you have been paying extremely high rent.
Lenders try to make it easier for first home buyers, second home buyers and investors to qualify for a 5% deposit loan. To qualify for a 5% deposit loan (a 95% loan facility) these are made up of the following;
- No deposit loan ~ 100% loan via a guarantor. Guarantor offers their property as part of the deposit as security. The guarantor can offer 20% equity in their home for the deposit and the 80% loan is taken over the new property purchase. With this structured type of lending you can do away with paying any lenders mortgage insurance.
- Rental payments ~ a number of lenders will consider the rental paid as your 5% deposit. You still need the 5% deposit or enough funds to settle the property at settlement.
- Inheritance or Gift ~ if you have received a gift or inheritance which has been in a savings account for a minimum of 3 months you may qualify.
- Work bonus or shares ~ these are also acceptable as savings.
- Paid out a Personal or Car loan ~ if you have paid out a loan in lesser the time or term taken with a 5% equivalent as a deposit amount you may quality.