Finding Investment Loans in Melbourne without a deposit

June 11, 2013
Michael Dornan

It is common knowledge that you need a deposit to buy a property. If you talk to a Home Loan Broker in Melbourne, one of the first questions they will ask is how much of a deposit do you have. If you do not have a sufficient deposit saved, don’t put aside that dream of owning an investment property just yet. In his book The Investment Property Plan, Stephen Zamykal provides several ideas for you to consider to boost your situation.

The most preferable option is to use the equity in your home. Another idea that he shares is that you can borrow money from family members, received in the form of a gift. Whichever way you go about getting your deposit, keep in mind the view that your lender will take.

A number of banks will lend you 95% of purchase price, inclusive of Lenders Mortgage Insurance (LMI). This means that you only need to contribute 5% of the purchase price of the investment property plus associated costs — and this 5% can come from the methods mentioned above. It is important to do your calculations correctly, as you are likely to have to pay a few bills before your property is able to pay for itself. Remember, you will need to have funds available to pay for any shortfall.

The following are several things that you should keep in mind before looking for Melbourne Home Loans. A bank will consider if you have a substantial income. You need to prove to the bank that you are able to pay your Investment Loan as per their serviceability requirements. If this is satisfactory, the next thing they will check is your savings habits for the previous 3 months (called ‘genuine savings’). On the plus side, the majority of banks view mortgage repayments against your home as evidence of your genuine savings. Hopefully these tips have made your search for Cheap Home Loans in Melbourne a little clearer.

Posted in: Property investment

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