Are low-deposit loans dead?

Are low-deposit loans dead?

In recent weeks we have seen a number of home-loan lenders pull out of the low-deposit loans space.

As a result, potential buyers are having to stump up property deposits in excess of 5% (plus costs) to buy property.

To put this in perspective, borrowers in Sydney (where the average property price is $800,000) would need to have a deposit in excess of $40,000 to qualify for finance.

Further, when you consider property prices are consistently rising across most of the capital cities, the deposits potential buyers need will continue to grow.

But while some banks are no longer happy to play in the low-deposit space, there are still lenders that are.

For anyone looking to buy property in the not-too-distant future, it is critical you do your due diligence. Speak to a finance professional to find out which lenders will still lend above a 95% loan-to-value ratio.

Also, remember that interest rates have never been lower. As such, the cost of borrowing has never been more affordable – which is great news.

John Flavell is CEO of Mortgage Choice

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