Do you qualify for 98% Home Loans?
Are you a first home buyer struggling to come up with the 10% or 20% deposit required to purchase a house in New South Wales?
With 98% home loans, you can be approved with no genuine savings, making getting into your dream home a reality sooner.
Here's what you need to know:
What do I need to qualify for 98% home loans?
The way that a 98% home loan works is you apply for a 95% home loan and the cost of Lenders Mortgage Insurance (LMI) is added into your mortgage. This is one less expense you need to find upfront.
Of course, you still need to ensure you tick off certain criteria. These include:
- Sufficient income to cover ongoing mortgage repayments
- Employment in the one company for the past six to 12 months
- Little or no debt, like credit cards or personal loans for things like cars or holidays.
- Ensure you have a good credit history, with all bills paid on time for at least six months and no bad credit reports.
- A 5% deposit. However, this does not have to be genuine savings, meaning it could come from a gift as an example.
What's involved with the loan?
Usually a bank will require you to have 20% genuine savings, which means you avoid paying lenders mortgage insurance (LMI).
Anything less than a 80% loan is considered risky for a bank or lender and this insurance protects them in the event you happen to default on your payments.
If you instead require a 90% or 95% loan, you need to add in the cost of LMI, which is usually 2% of the property value. This can cause challenges for you when trying to save for a property deposit.
That's not adding in your legal fees, stamp duty, conveyancing fees and any home loan set up fees.
The 98% home loan means you'll avoid having to find the additional funds for your LMI and you'll get to pay this off as part of your regular mortgage repayments.
The other added benefit of this loan is you won't be required to prove you've gained the deposit via genuine savings. That means you can use a First Home Owner Grant or a gift - ideal for the first home buyer struggling to save up the funds needed for a deposit.
What features are in the 98% home loan?
Here is a list of the features you can expect in this home loan:
- Genuine savings not required
- Redraw
- 100% offset
- Split loan facility
- Internal portion transfer (split loan)
- Loan access system
- Loan access card
- Inward BPAY
- BPAY
- Outward third party debits
It excludes construction loans. All loans are subject to credit and lenders approval. for properties over $1m, a higher valuation fee will apply.
What will my interest rate be?
With interest rates currently at record lows, you're probably wondering how taking out a 98% home loa is going to impact your interest rate.
The interest rate on the loan we've secured at Ohana Finance is 5.25% pa. The comparison rate is 5.31%.
What am I eligible to purchase with the loan?
Whether you're looking to purchase an established home or want to buy from a plan, this loan is adaptable for both.
If you're looking for existing Shellharbour properties, here are some properties you might be interested in that will allow you to use the 98% home loan and qualify for the First Home Owners Grant if you're a first time property buyer.
$590,000
2/32 Mayfield Circuit, Albion Park
$399,000-$425,000
13 Lendine,Street, Barrack Heights
$529,000
And these are examples of current properties you can purchase off the plan:
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Ready to speak to a mortgage broker?
We've become renowned for being able to successfully secure loans for clients others haven't in Wollongong, Shellharbour and Nowra. Having worked within the finance industry in many roles, including home finance manager for major banks and bank manager, our mortgage brokers understand what lenders are looking for.
We'd love to chat about your situation and how we might be able to help. Book a home loan review today with Scott or Shaun.
Want to be financially fit first?
We understand that you may still be in the early days of preparing to buy your first home. To ensure you set off on the right foot from day one, we've put together a Financially Fit Bootcamp.
The FREE bootcamp is a series of emails, one dripped out to you every couple of days, with a critical task to complete to ensure you're 100% ready when it comes time to finally buy your first property.
This will put you in the best position possible to secure the home of your dreams!