How to get into your first home with ZERO deposit

Ok, so you want to live in your own home, and get ahead financially, but after paying out rent each week, plus your normal day to day expenses, you have nothing much left to save.

It’s super frustrating! Your friends are all starting to get their own homes, and you earn a good wage, so you should be able to too. You know you can afford the repayments…after all you’re already paying rent each week (to pay off someone else house!!) which is roughly the same amount as your mortgage repayments would be. It should be possible!! But no matter how much you try to cut back on things, you can’t quite save enough! It’ll be years before you can save 20% deposit, and by then the house prices will have increased so you’ll need to save even more!!!

Arrrgh it’s so close…yet the great Australian dream seems so far away!

Well it doesn’t have to be….if you know the right people.

This is where Mum and Dad or Nana and Pop or Uncle Joe come in. If they have enough equity in their home, they can choose to be a Guarantor for you. Basically this means you can borrow up to 105% which means you don’t even need a deposit. That’s ZERO deposit! 80% of this loan goes against your new home, and the other 20-25% goes against your Guarantors home as a second mortgage.

I know a part of you might find this really hard….asking for help, but you’re still doing all of the hard work. The good thing about this is that you will be paying off the full amount off, so Mum and Dad or whoever your Guarantor is, doesn’t have to make any extra repayments. The idea is that after a few years, your house should have increased in value enough for your broker to have a look at the mortgage and restructure it to release your Guarantor from the loan.

Obviously your repayments would be higher than if you were to save a deposit, however it’s a great step up for you if you can afford to do it this way and have the good fortune of someone in a position to be your guarantor.

Your broker or bank will still assess whether you are suitable for this set up. As mentioned your repayments will be higher, which means they will need to see a strong income source, and the ability for you to come through on your repayments. They will also want to ensure the house is a common type of house, in a major area so it is desirable for the majority of people, which means in should increase in value and be easy to sell should the situation arise.

If you do go along this avenue please seek legal advise, and make sure it’s going to work for everyone, and your Guarantors aren’t going to be left high and dry if you stop making repayments. Get a contract written up so both parties are covered and know all of the ins and outs.

So the Great Aussie dream really is possible. If you believe you are in a position to make this work, and can prove a good credit history and savings record, then it might be time to talk to your loved ones, and see if anyone is a position to help. They might say no, but chances are, as long as some paperwork is in place, they will be more than happy to help you get a foot in the real estate door.

Once you have them onboard, find a broker, lender or bank that will help and Voila! You’ll be in your new home before you know it!