Home News Non-bank lender launches low-deposit loans

Non-bank lender launches low-deposit loans

Font size :

Property buyers who are short of the required 10-20% deposit will now have an option with the launch of low-deposit loans in the market.

National Mortgage Company will offer two new mortgage products catering to borrowers who only have 5% deposit. The loans will carry similar interest rates as the banks' standard variable rates and will only be offered as a full-doc loan.

"We haven't put in additional loading into the product," said Fernando Lemos, head of retail at NMC. "The only thing that you need to take into account is the Lenders Mortgage Insurance, which will be higher because you're borrowing more against the value of the property."

The 95% loan-to-value-ratio (LVR) loan is available to owner-occupiers and investors. Lemos said the owner-occupied option comes with the benefit that no genuine savings are required - deposit funds can be gifted and/or borrowed. This means you only need to show say 3% genuine deposit and the rest as gifts or borrowed.

"The LMI providers are happy to accept gift as a part of the 5% deposit, if you don't have the whole 5% saved. If you can demonstrate that you have at least 3% that you genuinely saved, the other 2% and cost can be gifted or borrowed. It's reviewed on a case-by-case basis, depending on how strong you are as a borrower. We look at the total asset position, we scrutinise the borrowers really carefully, so if you're a borrower with a strong employment for at least two years and maybe own a car, some furniture and few bits and pieces, then they're the type of borrowers that we want," said Lemos.

Lemos said they adopted a few tighter controls around borrower quality to offset the risk factors around the LVR. "We don't want this product to become available to everyone, such as those who had bad credit. We're after really strong borrowers, traditional bank clients who have been knocked back by the banks because they haven't saved enough deposit. In the current market, a large number of quality borrowers simply don't have 10% or even 20% deposit required," said Lemos. "With a number of large lenders reducing their offering in this space, we see an opportunity to assist quality borrowers via these products."

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

Many millennials are relying on an inheritance to buy homes Many millennials are relying on an inheritance to buy homes

Lawyers are seeing cases where disputes over inheritance have created tensions within families Read more

Gen Y homeowners fearful of interest rate rises Gen Y homeowners fearful of interest rate rises Many are worried rising interest rates will negatively impact their cost of living expenses, according to a new survey ... Read more

Young Sydneysiders are less keen on homeownership Young Sydneysiders are less keen on homeownership Many would rather ‘rentvest’ than be tied down to a costly owner-occupier mortgage, according to new studies ... Read more

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate The sprawling redevelopment aims to boost the supply of affordable housing in Sydney ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Aug 24, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords