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Last updated on April 8th, 2022 at 12:00 pm by Thomas Perrotta

Compare personal loans

It can be difficult to gather the funds you need for a deposit on your home, especially if you’re wanting to avoid paying a hefty amount on Lender’s Mortgage Insurance (LMI). You can compare a range of personal loan options right here with Savvy to help you make your home purchase deposit dream a reality.

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site-logos Wisr Unsecured Personal Loan
  Advertised Rate from (p.a.) Comparison Rate from (p.a.) Loan Term Min-Max Loan Amount Monthly
Repayments
 
site-logos 8.20%
fixed up to 17.95% p.a.
9.04% 
fixed up to 18.87% p.a. based on $30,000 over 5 years
3 to 7
Years
$5,000 to
$64,000
$611.17
over 60 months
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Borrow between $5,000 and $64,000 with great low rates for excellent credit. Get a personalised rate estimate in 2 minutes that won't impact your credit score.

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site-logos Plenti Unsecured Personal Loan (Excellent Credit)
  Advertised Rate from (p.a.) Comparison Rate from (p.a.) Loan Term Min-Max Loan Amount Monthly
Repayments
 
site-logos 7.39%
fixed up to 8.79% p.a.
7.39% 
fixed up to 9.91% p.a. based on $10,000 over 3 years
3 to 5
Years
$5,000 to
$50,000
$599.57
over 60 months
Go to site

Apply for an unsecured personal loan and enjoy low rates for excellent credit. With no early repayment or exit fees, there’s a lot to love about this loan.

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site-logos OurMoneyMarket Unsecured Personal Loan
  Advertised Rate from (p.a.) Comparison Rate from (p.a.) Loan Term Min-Max Loan Amount Monthly
Repayments
 
site-logos 5.85%
fixed up to 20.99% p.a.
6.48% 
fixed up to 23.83% p.a. based on $30,000 over 5 years
1 to 7
Years
$2,000 to
$75,000
$577.89
over 60 months
Go to site

Apply for an unsecured personal loan between $2001 to $75,000 for a variety of loan purposes. Get a personalised rate estimate in minutes without impact your credit score.

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site-logos Harmoney Unsecured Personal Loan
  Advertised Rate from (p.a.) Comparison Rate from (p.a.) Loan Term Min-Max Loan Amount Monthly
Repayments
 
site-logos 5.35%
fixed up to 19.09% p.a.
6.14% 
fixed up to 19.99% p.a. based on $30,000 over 5 years
3 to 7
Years
$2,000 to
$70,000
$570.96
over 60 months
Go to site

Borrow up to $70,000 with personalised rates and repay over 3,5 or 7 years loan terms.

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Disclaimer: A comparison rate indicates the true cost of a loan. The comparison rate displayed for this advertiser is calculated based on a loan amount of $30,000 over 5 years and represents the effective rate on the loan. Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.

Personal loans for house deposit

Can I get a personal loan for my house deposit?

Yes – it’s possible to get a personal loan to make up the required funds if you’re wanting your deposit to reach 20% of your home’s value. Homebuyers look to this number specifically as it’s the threshold for lenders to apply LMI, which is a cost associated with insuring lenders in the event that their borrowers become unable to fulfil their repayment requirements. Personal loans in themselves are relatively easy to apply for with fast approval times, making them an appealing option for those looking to edge their deposit amount closer to 20%.

LMI is a substantial cost to be taken on by a homebuyer in addition to their repayments, typically costing thousands to tens of thousands of dollars depending on the size of the loan. This is why homebuyers without the funds to afford a 20% deposit might look to a personal loan as a means of sidestepping it; they can be a crucial way to save money in the long term, particularly if you’re able to pay off your personal loan quickly and not accumulate more in interest. However, it’s important to note that this isn’t always the best avenue for homebuyers to take for their mortgage needs.

Personal loans come with much higher interest rates than home loans, meaning that the amount you’ll be paying in interest is more likely to mount up quickly. For example, if you decided to take out a $30,000 personal loan at a rate of 10% and repay it over five years, you’d be paying comfortably over $8,000 in interest in that time. In some cases, you may find that it’s more cost effective for you to take the LMI hit upfront than have to repay a second loan with a high interest rate for years down the track. It’s important to assess these numbers ahead of time so that you know which option is the best for you; there are LMI calculators available to use online which can help with this.

How else can I avoid paying LMI for my house deposit aside from personal loans?

The most common way that homebuyers are able to avoid paying LMI with a sub-20% house deposit is through a guarantor home loan. This involves you listing someone such as a parent, sibling or close friend as a form of security for your mortgage in which they agree to take on the responsibility of servicing the loan should you become unable to. This provides greater confidence to your lender that their loan will be repaid, which can not only allow you to avoid paying LMI, but potentially any deposit at all. There are lenders on the market willing to greenlight mortgages of 100% of the home’s value when a guarantor is listed.

It’s important to note that not every homebuyer has someone who is a viable candidate to be a guarantor on their home loan. This automatically rules this out as an option in instances such as these. Additionally, entering a guarantor agreement can put strain on a close relationship: your guarantor is trusting you to be able to pay off your loan without their involvement and not doing so places a significant, unwanted financial burden on a loved one. Additionally, guarantors may have trouble getting loans of their own during this period and are restricted with what they can do with an asset, such as their home, if required to use it as security.

The pros and cons of getting a personal loan for your house deposit

PROS

Avoids LMI

The primary benefit of a personal loan here is that it bypasses the need for you to pay LMI, which is an upfront sum that’s likely to cost you thousands

Fast and easy application

The time from application submission to funds hitting your account for a personal loan is fast, usually taking no more than a few days

Builds your credit rating

Getting a personal loan and servicing it promptly and regularly will increase your credit score at a faster rate, or help your home loan approval chances if you take one out prior

CONS

High interest rate

Personal loan borrowers are forced to contend with the high interest rates that are assigned to personal loans, which can add up if not paid off quickly

Two loan repayments at once

Getting a personal loan to help with your home loan creates a situation whereby you’re servicing two different loans, potentially on two different schedules

May be more expensive

Depending on the size of the personal loan you need and its interest rate, it may end up being cheaper to simply pay the LMI rather than reach a 20% deposit

Frequently asked questions about personal loans for a house deposit

Can I use a personal loan to fund my entire house deposit?

No – you won’t be able to find any lenders who’ll accept a deposit made up entirely of a personal loan. You’ll need to contribute a significant portion of that in savings to qualify. From a mortgage lender’s perspective, the lower the percentage of your deposit is personal loan funds, the better.

Will lenders always approve a personal loan for my house deposit?

No – there are some lenders who require genuine savings to make up the entirety of the house deposit. This may mean that you don’t qualify for their home loans and will be forced to pay LMI if you don’t have a guarantor. However, if you took out a personal loan six months ago, for instance, and still have those funds sitting in your account, these will be considered genuine savings and can be used for your house deposit.

Will lenders always approve a personal loan for my house deposit?

No – there are some lenders who require genuine savings to make up the entirety of the house deposit. This may mean that you don’t qualify for their home loans and will be forced to pay LMI if you don’t have a guarantor. However, if you took out a personal loan six months ago, for instance, and still have those funds sitting in your account, these will be considered genuine savings and can be used for your house deposit.

How do I compare personal loans for my house deposit?

There are a number of factors you should compare on personal loans, including:

  • Interest rate: look out for lower rates that reduce your overall interest outlay
  • Fees: added costs such as establishment, ongoing and late repayment fees can set you back if you’re not careful
  • Loan term: if you want a particularly short or long loan term, you should look for lenders that offer between one and seven years
  • Features: additional features like extra repayments and redraw facilities add flexibility to your loan experience
What factors affect my approval chances for a personal loan for my house deposit?

Your credit rating and your ability to service your loan are two of the biggest factors in this regard. If you have a lower interest rate, you may be forced to go to a smaller online lender who specialises in bad credit finance. However, if you’re asking for more than a lender believes you can comfortably afford, no lender will approve your application. Ensure you work out exactly how much you can afford to repay easily prior to applying.

Can I avoid LMI with less than 20% deposit as a first homebuyer?

Yes – if you’re a first homebuyer, you may qualify for the First Home Loan Deposit Scheme, which provides a guarantee that allows you to apply with a deposit as little as 5% of your home’s value.

Can I pay for my house deposit with a credit card?

No – this would be considered too high-risk by your mortgage lender. Additionally, large transactions such as a house deposit on a credit card are highly inadvisable, given the interest rates that kick in at the end of the month.