How To Get A Home Loan Without A Deposit
Becoming an owner of a house is a big achievement and taking a home loan to fulfill this dream is one of the best ways. But the process of getting a home loan requires a person to be well-prepared with all the hassle that comes with paperwork and making a deposit for the same. Moreover, saving money for paying off deposit is another challenge that is faced by people, but here is a way you can secure a home loan without any deposit.
Here is what you need to do as a first-time buyer?
The increasing cost of living may interfere with the amount you need to secure for the deposit and thus taking a loan is very difficult in bigger cities. Having a guarantor is a must for getting approval on a home loan. If you want a lender to grant you a 100% loan on the value of the property, it very unlikely you can secure that home loan with no deposit without a guarantor.
You may be left with only one option that is to go for the property on which you have to make a low deposit for a home loan.
Get a home loan with no deposit
Usually, the sum of money you need to pay as a deposit comes down to the lender. Lenders prefer people that are first-time buyers of property as they are expected to pay their loans on time. Getting a home loan with no deposit to be paid is to have a guarantor. Also, make sure that you have a good credit report as it is difficult to get home loans for a bad credit report.
What is a Guarantor?
A guarantor is someone who already has the property, being a guarantor, their responsibility is to pay the loan in case the person is unable to pay his/her debts. Since it is a huge risk it is not easy to find a guarantor, for that you can ask someone close to you who already possess the property. You can ask your parents to act as a guarantor and use their property as security. All you need to make sure is that the property of your guarantor exceeds the value of the property you are taking a loan for.
Benefits of guarantor loans for borrowers
Having a guarantor will help the borrower to get a home loan with no deposit or lender mortgage insurance (LMI). The investor and homeowner enjoy the lower interest rates along with the 105% loan coverage of stamp duty and other costs.
Getting a low-interest rate
When you find a lender, who offers 100% value of the property as a loan, in this situation they mostly charge higher interest rates. Having Guarantor will help you get a great deal on offer from the lender.
Benefits of guarantor loans for guarantors
Guarantor enjoys the security of responsibility for a fixed liability. They also get the right to choose how they are going to secure the guarantee. In case if a person has paid-off about 20% of the loan the guarantors no longer have to tie themselves with a home loan and can step down as guarantors.