While buying a home is sometimes a lengthy and well-planned process, there are other times where you want to buy a home quickly but find yourself with little or no down payment to offer. There might be several reasons for this, such as being forced to find a new home with little notice or having a brief amount of time to make an offer on a house that’s become available. No matter what the situation, you may now be considering no deposit home loans in order to secure that home you’ve always wanted. However, before you do, there are several pros and cons to consider before you move forward.
There are several advantages to securing no deposit home loans, and the most advantageous is that you will be able to make an offer on a home right away. This allows you to find a home faster or to buy a home that might have otherwise been unavailable to you. Another advantage is that while rates can be high for these loans, they are more affordable and also more available through a greater number of banks than they used to be. In addition, if you have excellent credit, the odds of securing a loan like this are greater, and it will give you an added incentive to keep your score high.
Unfortunately, there are a number of disadvantages to securing no deposit home loans. For example, many banks have extremely strict rules that are attached to these loans, and your credit score must be quite high in order for them to even consider it. Outstanding charges or previous bankruptcies will probably disqualify you. Another con of no deposit home loans is that you may end up paying more for the loan than your home is worth. If the value of your home drops over the years and you’re paying a hefty interest rate, you won’t have much of an effect on the principle, and eventually, you’ll be paying more in overall costs than what your home is worth. One of the biggest cons of loans like this is that you will have to pay mortgage insurance as well as the monthly payment, and because this insurance protects the bank, the monthly charges can tack on hundreds of dollars to your loan. Before you consider taking out no deposit home loans, carefully consider your individual financial situation and what it will cost you in both the long and short term.