Disclaimer : For now, 100% finance requires a $20k deposit, which can come from various sources and does not need to be saved by the borrower as “genuine savings.”
What Does 100% Finance Mean and What is Shared Equity!
Shared Equity – 80%/20%
With a small deposit of $20k, you can buy a home by borrowing 80% from one lender and getting another lender to cover the remaining 20% (less your $20k). You pay stamp duty if applicable*. To qualify, you need to show that you have the capacity to repay the 80% loan over 30 years and the 20% over 10 years.
The goal is to repay the loans and own your home within 10 years or when you have enough equity to refinance at 80% LVR or less.
Shared Equity – 100% (coming soon)
Soon, some properties will be offered for sale where you will only need a deposit for stamp duty (if applicable) and borrowing costs (conveyancing, etc.). These will be available on select units or house and land packages. The repayment capacity is based on the 80% loan, while the 20% is equity shared with an investor. Over time, as you build equity in your 80%, you can buy out the investor.
Note that since the investor provided the 20% at no cost to you, they will share in the capital growth of your home.
Alternative 100% funding options
Family Guarantee – 110%
If a family member can secure 20%+ against their home, and you can repay the 100% / 110% loan, you can avoid LMI costs# = no deposit.
SMSF Deposit
There are options to invest your or family members’ Super funds to earn a return and then “borrow” those funds to use as your deposit = no deposit. Currently, the SMSF receives a 3.5% return, and the borrower pays 5.5% over 30 years.
Next Steps – What Should I Understand from These Options?
If you are considering buying a home, chat with an experienced broker who can review your situation and explain your lending options. You don’t know what you don’t know—brokers find finance for first home owners and other borrowers 24/7.
Book a time to chat or call us.
#buyinvestlive
* see FHO Stamp Duty Schemes
# 100% + stamp duty and for some lenders – payout consumer debts
