No Deposit Loans

In the USA, it is not very common to find a no deposit home loan or mortgage. However, in some places around the world, these types of home loans are more common. In fact, some of the industry's leading lenders are now offering no deposit mortgages. On the other hand, most of the major banks are not offering these types of loans because they are higher risk than traditional home loans.

What type of customer would likely be interested in a no deposit home loan? Probably the most likely individual would be someone who has a high income and they are working in an industry that is considered to be secure. With this type of loan arrangement, you are basically presuming the cost of renting is outweighed by having immediate ownership. Each situation is different.

With this type of loan, the lender takes on a greater than normal risk. As a result of that, you will pay a higher than normal interest rate. A general rule of thumb is that you can expect to pay around 2% higher than the current market interest rate. You should also remember that with this type of loan, you still have other costs such as mortgage insurance and other loan fees. Keeping that in mind, you may want to speak with a financial professional and determine whether this is the type of loan that is appropriate for you.

 A no deposit home loan can be a good choice for some customers, depending on where you live. Keep in mind that even though you are not making the customary down payment, you are still agreeing to make the monthly payments over the lifetime of the loan. Just as it would be with a traditional mortgage loan, this is a legal agreement between you and the lender.