If you have less than a 20% deposit, you may still be able to buy through a standard home loan. However, lenders have different rules about which applications they'll consider and how they'll price them.
Why pre-approval can be harderBanks operate within Reserve Bank limits on how much new lending they can provide to borrowers with deposits below 20%. Because this lending capacity is limited, some lenders can be more selective about issuing low-deposit pre-approvals. Policies can depend on whether you're an existing customer and whether you've already found a property.
What if you've already had an offer accepted?Some banks may be more willing to assess a complete application for a specific property than provide an open-ended pre-approval. This varies by bank and doesn't mean approval is guaranteed. Always talk to your adviser and lawyer before making an offer without suitable finance protection.
Interest rates aren't the same everywhereSome banks apply a low-equity margin on top of a base rate, often with different tiers depending on your loan-to-value ratio (LVR). Others use separate low-equity pricing or different rate structures. This means two banks can produce very different costs for the same deposit.
What happens when your equity improves?At some lenders, you may be able to move to a better low-equity pricing tier during a fixed term after meeting their requirements. At others, changes may need to wait until refix or be subject to different conditions. Property valuation requirements can also vary.
How we helpWe compare which banks are currently considering low-deposit applications, their pre-approval approach, the actual rates and premiums, and how easy it may be to improve your pricing as you build equity.
