100% Home Loans – The No Deposit Mortgage is a Dying Breed

Since the current mortgage crisis lenders have been tightening their policies and the number of 100% or no deposit home loans are slowly being eradicated from the Australian mortgage market.

A year ago many lenders were offering no deposit home loans. Today there are only two – RAMS and St George.  RAMS home loans have many variable and fixed rate products that allow you to borrow 100% of the properties value while St George have their own no deposit loans separate from their other products. You can view the latest interest rates at RAMS Home Loans  and St George Home Loans.

The title of “no deposit home loans” is a bit of a misstruth. Potential borrowers believe that they do not need a deposit but this is far from the truth. You will need to take into account the following costs when making a purchase;

Stamp Duty – Up to 5% of the properties value

Lenders Mortgage Insurance – Up to 3% to 3.5%

Legal Fees – $600 to $1500

Establishment Fees – $0 to $1,000 depending on the lender

If you were to purchase a $400,000 home then you could be up for $32,000 in additional costs.

The only exceptions to this are

First Home Buyers – receive a grant from the government and reduce the stamp duty costs.

Building a New Home – where stamp duty is only calculated on the cost of the land.

It is anyone’s guess whether RAMS and St George will continue to offer these loans in the future. However, the trend is that many lenders are moving away from this type of lending and it looks like they will be removed from the mortgage market all together.

If you would like help in acquiring a no deposit home loan we can assist with all the calculation by simply contacting us or providing information on our online quote form.