What are the best options for entering the home market with a low deposit without being locked into high interest fixed loans?

Hi Graham,

I hope that you are enjoying your weekend & what a great question.

A common question that I hear from the customers that I deal with is exactly this. "Do I have to have a fixed rate loan because I have a low deposit" the simple answer is no. If you have a low deposit but can pass the stress tests that the lenders would apply then there is no reason you would have to fix your loan. A lot of first time buyers do choose to do this so they can budget for this commitment & get into the habit of having a loan payment each fortnight or month.
What we tend to recommend is that our clients split their loan have a portion fixed & a portion variable to have the flexibility of making extra repayments & still have the benefit of a planned payment.
What a lot of the lenders do put into place with customers who have a smaller deposit is principal & interest payments. This means that you are paying down a portion of the balance with each payment therefore allowing you to save interest & build up equity in the property.
I hope this helps & happy to discuss further.

Hi Graham.
Difficult to answer your question without knowing how much deposit you actually have.
Depending on your income and your wife's income there are a number of potential options available.
At the moment fixed rates are quite good when compared to variable rates.
The advertised variable rates are mostly only given where a person has a 20% deposit, whereas the fixed rates apply for people with smaller deposits.
Possibly you need help putting a plan together that moves you towards your home ownership goal.

Hi Graham.
fixed rates are actually optional. It is totally up to you whether you choose fixed or variable. As a Lending professional we are not authorised to advise you either way.
The decision you make will depend on your personal situation in regards to income and what you have planned for the future. EG kids, starting own business, etc.
Having a low deposit does mean you may pay higher fees like Lender's Mortgage Insurance (LMI) unless you have parents willing to put forward a limited guarantee for you.
Please let me know if you want to know more.

Minimum deposit required by most lenders is 5% plus costs (i.e. Stamp duty, solicitors fees etc). They do have quite competitive variable rates at 95% lend. However if you would like certainty for the next few years and would like to fix your loan rates start at just under 4% for 3 year fixed.

Everyone's circumstances are different, so it's best to speak to a broker to discuss what is best for you.