 |
 |
 |
The Status of 100% (No Deposit) LoansOnce upon a time it was possible for some prospective buyers to get a home mortgage loan for the entire amount of the purchase price. No down payment deposit was required. To qualify for one you had to have a high income and a long and steady employment history. Typically interest rates for these loans were higher. Then along came the world-wide financial crisis in 2008 and everything changed. Today it will be difficult, if not impossible, to find a 100% No deposit loan. Some lenders are offering 90% loans and others 95% loans. What happened? Even during the best of times, 100% No Deposit loans involve a high degree of risk for both the borrower and the lender. As an example, we only have to look at what happened in the United States. Lenders were routinely making loans to high risk buyers during what we now know was a housing bubble. Home prices had been inflating for years and were at all time highs. Once prices began to fall, the trouble began. Even in Australia, if you were loaned $400,000 to buy a home whose value has now dropped to $380,000 both you and the lender may be in trouble. If you choose to stop making payments the bank will not be able to repossess the home and sell it for enough to avoid a loss. If you search the Internet you may still find a few sites which claim to still be offering 100% No Deposit loans, but those claims may be misleading. Other lenders may be willing to grant a 100% loan if you can find a guarantor to co-sign the loan with you. Parents or other relatives with high incomes may be sufficient. Although the housing market in Australia still sees rising home prices, there are some experts predicting an eventual slowdown and even a bursting of what they see as a housing bubble. Before seeking a 100% loan you need to consider your options should Australian home prices decline significantly in the future. |
