It’s possible to buy an investment property with no deposit but it isn’t as simple as it used to be.
105% guarantor loan
A guarantor loan is the best way for you to buy an investment property without a deposit. The benefits are:
- You don’t need a deposit. You can borrow the full purchase price and costs.
- You don’t need to pay an LMI premium.
- You can qualify for exceptional interest rate discounts.
- You can buy a property now rather than missing the boom!
How does it work? The bank accepts a limited guarantee from your parents or another relative, which is secured by a property that they own. Because the bank has additional security, they’re happy to lend the full amount required.
Do I qualify to borrow 105%?
While there are many criteria that you must meet to qualify for an investment property loan. The additional criteria that you must meet for a guarantor loan are:
- Your parents (or other relatives) must own a property in Australia which can be used as additional security for the loan.
- You aren’t required to have genuine savings.
- You can’t buy multiple investment properties, only one (some exceptions apply).
- You must not have excessive unsecured debts such as credit cards (some exceptions apply).
- Your parents must be working or be a self funded retiree (some exceptions apply).
Do you need help with a no deposit investment loan? Please call our mortgage brokers on 1300 889 743 or fill in our free online assessment form.
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Getting an investment loan with a small deposit
95% investment loan
Did you know that borrowing 95% of the property value (95% LVR) is actually quite difficult for an investment property?
This is due to a number of reasons:
- You must have 20% equity in another property (some exceptions apply).
- You must have 10% of the purchase price in genuine savings (some exceptions apply).
- Most lenders will only allow you to borrow 95% including LMI, not 95% plus LMI.
- There are lenders that allow exceptions to all of the above requirements.
Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will call you to discuss which loans are suitable for your situation.
An additional loan
One of our banks can lend 90% or 95% of the property value and also approve a small unsecured loan to assist you with paying for costs such as stamp duty.
This unsecured loan is at the same interest rate as the home loan, so this works out to be a very effective way to buy a property with a small deposit.
Squeezing your equity
Did you know that in some cases you can refinance your property portfolio up to 95% of their value? By squeezing more equity out of your existing properties you can get a bigger deposit and buy more properties.
We can help you do this in a few ways:
- We have several lenders that can refinance an investment property up to 95%.
- We have lenders that accept equity in another property as genuine savings.
- We can arrange free bank valuations with several lenders, allowing you to proceed with the lender with the highest valuation.
Vendor incentives or kickbacks
It isn’t uncommon for builders or developers to offer incentives, rebates or kickbacks to buyers which can be used as part of their deposit.
Unfortunately, the bank valuers will reduce their valuation to take these incentives into account. As a result this method of financing your deposit isn’t normally effective.
Government grants
In some states of Australia, it’s possible for investors to receive a grant to buy a newly built investment property.
If you have a small deposit then this can be a good way for you to get into the market right away rather than saving a large deposit.
How do I apply for an investment loan?
We’re no deposit lending specialists and we have a passion for property investment. We’d love to help you with your next investment so why not complete our free online assessment form or call us on 1300 889 743 and find out what we can do for you.