When buying a house, some banks or mortgage lenders will accept a deposit on a mortgage of less than 10 percent (for example, a three percent deposit), and some will provide a no deposit home loan, depending upon the location and price of the property. However, sometimes a deposit of less than 10 percent may mean additional mortgage insurance is required. An example where the bank may not require a deposit for a home loan is where you have enough equity in another property.

When buying investment property, many people will leverage on the equity in their home. This means that the bank may lend you 100 percent of the home loan amount, as it will have your home as security. But there are also a range of other home loans on the market that do not require a  deposit, but the interest rate for these products may be higher than for regular mortgages. An example of this type of mortgage is a non-conforming home loan. Find out more about non-conforming home loans.

Deposit when purchasing a property

A deposit of 10 percent of the price of the property is normally required by the vendor to show your intention to purchase a property. Some vendors are prepared to rest on a 5% deposit. Simply ask the real estate agent closer to the time of making an offer as to what deposit amount will be required and make sure you have it available at the time you make an offer.

If you don’t have spare cash lying around for a deposit – some people don’t – you may be able to use a deposit bond. Deposit bonds are issued by insurance companies and provide a guarantee to the vendor that the deposit will be paid – usually at settlement time. The cost of a deposit bond is approximately one percent of the value of the deposit. For example, you might be planning on buying a house for $300,000. A 10 percent deposit on this property would be $30,000, so the deposit bond would cost $300. If you need to get a deposit bond, most banks and mortgage providers will be able to assist you.

Not all vendors will accept a deposit bond so you will need to check with the real estate agent whether they will accept it.