No-deposit home loans are popular with first home buyers because they allow purchasers to borrow 100 per cent of the price of a house and not have to save a deposit. In some cases, buyers can borrow more than 100 per cent to help pay stamp duty, mortgage insurance and other costs.

Generally speaking it is a good idea to save at least a small deposit rather than borrowing the full purchase price. This is because the costs associated with a 100% loan are higher than that with the usual mortgage. Also the qualifying criteria is extremely stringent.

There is no such thing as a ‘low doc’ or a ‘bad credit’ 100% home loan. Therefore you must have a clean credit history, full financials and a steady job with a strong income.

When the property market is rapidly growing as it did in 2000, putting off your purchase by just one year could have put the house of your dreams completely out of your reach. During that period, property prices in some cities in Australia were growing by as much as 50% per year. In such circumstances buying as soon as possible makes perfect sense.

Today the property market is far calmer. Some areas are continuing to grow at a steady pace while others have experienced a drop.

You should be aware that buying without a deposit comes with a number of additional costs.

Mortgage insurance is the first cost to consider. Home loan lenders require borrowers to pay insurance if the size of a loan is more than 80 per cent of the value of the property. Insurance typically costs 2 to 3 per cent of the value of a home loan.

Another potential trap with no-deposit home loans is that they sometimes come with deferred establishment fees. This is a serious issue with no-deposit home loans because most borrowers go into them with the intention of switching to a standard loan with a cheaper interest rate in a few years.

When borrowing 100% you need to make sure that you can afford the loan that you are applying for, also taking into account your financial position if interest rates go up. Any property you decide to purchase with a 100% home loan must have plenty of potential for growth.

The good news is that today some lenders do provide 100% home loans at the same rates as those with a much lower LVR. Webdeal Home Loans are such a lender.

Interest Rate	Only 7.17%
Loan amounts	Minimum Loan of $50,000. Maximum loan of $600,000.
Interest rate type	Variable rate only
Loan Term	10 to 30 years.
Repayment type	Principal and Interest only.
Combination and splits	Can split up to 4 accounts (will consider more). Cannot combine with other products.
Repayment options	Direct Debit or Salary Crediting either monthly or fortnightly. Internet or telephone transfers from pre-nominated account for additional repayments.
Additional repayments	Unlimited
Redraw facility	No minimum redraws via Internet or telephone banking to pre-nominated account .
Withdrawals	Cash withdrawals not available other than electronic transfers as above.
Salary crediting	Available on both Principal and Interest and Interest Only loans.
Switching Loans	Can switch all or part of loan limit to another product, once LVR is less than 95%.
Frequency of Statements	Quarterly
Deferred Establishment Fee	During year 1      1.00% of original loan amount During year 2      0.80% During year 3      0.60% During year 4      0.40% During year 5      0.20% Year 6 onward    0.00%
Other Fees	$595 Settlement Fee
Substitution	Can substitute security within loan limit.

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