Taking Advantage of No Deposit Home Loans
No deposit home loans are a unique type of financial solution that can help to minimise expenses by eliminating the need to save cash for a deposit when buying a home. In order to be eligible, certain criteria will need to be met; but for those that already own a property and would like to purchase another – they may be able to benefit from this type of home loan with minimal difficulty.
By using the financial value from the first home’s equity, it can become possible to negate the need to save for a deposit by relying on the equity to act to secure a new loan on both properties.
How do no deposit loans work?
If a home was purchased years ago, the chances are that its market value will differ now compared to its original price. This difference in value is known as equity and it’s this amount that can be used to act as a deposit on another type of loan – in this case a no deposit home loan. By using the equity to cover the cost of any deposit for the second home purchase, the new loan can be secured with the option to combine any outstanding loan on the first home with the second.
This can help to further minimise expenses, as instead of paying separate mortgages on two homes; a lender will often be willing to roll both into one single sum – making it much easier to keep on top of repayments in general.
Can anyone apply for a zero deposit mortgage?
As mentioned previously, there are certain criteria that can dictate whether an individual will be able to apply for this type of loan in particular.
In all cases, and when not using equity as collateral on the loan, the applicant will need to be able to demonstrate a clean credit score – with many banks demanding years of provable repayment records to consider an application viable. This is why zero deposit loans are often pursued by property developers and investors, as it’s these individuals that will often have the assets already in place to secure their new loan.
Anyone with at least one property to their name could also stand to benefit however, and whether the new home is being bought for investment or personal purposes; those that can turn to their own equity will be much more likely to obtain approval. For further information contacting a loans broker can be useful, as these mortgage experts will often be able to help with finding the right types of loans for individual needs.