Today, OwnHome, backed by the Commonwealth Bank of Australia, introduced a groundbreaking solution for prospective homebuyers in Australia – the Deposit Boost Loan, an innovation that allows buyers to secure a bank loan with a 0% deposit.
James Bowe, Co-Founder of OwnHome, emphasized the need to challenge the conventional belief that a 20% deposit is essential for obtaining a mortgage and stepping onto the property ladder. He stated, “The idea that homeownership is out of reach without a hefty deposit is a misconception. Many Australians have the financial capacity to service a mortgage, but the ever-increasing cost of homes makes saving a 20% deposit nearly impossible.”
Cities in Australia are consistently ranked among the world’s most expensive places to buy a home. For instance, in Sydney, a 20% deposit for a median-priced house would require a staggering $329,000, not to mention additional upfront costs.
Bowe added, “Saving for a home deposit has become an insurmountable challenge in today’s economic climate. That’s why we’re removing one of the biggest hurdles facing aspiring homeowners – the upfront costs.”
OwnHome’s Deposit Boost Loan covers up to 20% of a home deposit, enabling customers to access an 80% loan-to-value ratio loan from OwnHome’s network of lender partners. Rather than the traditional requirement of hundreds of thousands for a 20% deposit, OwnHome customers need just $88,070 upfront, which covers the OwnHome Starter Fee (2% of the property price +GST) and government fees like Stamp Duty and transfer fees.
The Deposit Boost Loan is open to first-time buyers and owner-occupiers who meet the lender’s affordability criteria. Borrowers can use this loan to finance up to 100% of the property value, provided the total home value does not exceed $3,000,000.
Bowe explained, “Australians who don’t have the luxury of familial financial support are not willing to delay their homeownership dreams for over a decade just to save for a deposit. With the Deposit Boost Loan, aspiring homeowners need only 2.2% instead of 20%, reducing the time to enter the property market by nearly a decade.”
OwnHome is committed to responsible lending, ensuring that a customer’s debt-to-income ratio remains lower with a Deposit Boost-supported home loan compared to going directly to an 80% LVR lender. This is achieved by incorporating additional principal and interest repayments into home loan serviceability assessments.
Toby Norton-Smith, Managing Director of X15 Ventures at the Commonwealth Bank, expressed support for OwnHome’s efforts, stating, “Overcoming the deposit obstacle remains a challenge for many aspiring homebuyers, even those who appear financially stable. Without assistance, many families struggle to accumulate the upfront savings needed to access a home loan.”
OwnHome has secured $31 million in a series A funding round, with financial backing from prominent Australian institutions, including the Commonwealth Bank of Australia’s venture arm, X15 Ventures, and Square Peg Capital.
Bowe disclosed the company’s ambitious plans to facilitate $500 million in home purchases over the next 18 months. He emphasized the importance of additional measures to address Australia’s housing affordability crisis and noted the government’s efforts in this regard.
The Deposit Boost Loan’s launch follows a successful pilot program that generated exceptional demand for the innovative offering. OwnHome has already approved $5 million in deposit loans, corresponding to $20 million worth of new Deposit Boost-enabled home loans.
In addition to the Deposit Boost Loan, OwnHome provides an end-to-end service that includes assigning a personal Buyer’s Agent to customers, regardless of their budget or deposit contribution. These Buyer’s Agents assist customers throughout the entire home buying process, from property search to settlement, covering all conveyancing costs and property due diligence.
The Deposit Boost Loan is initially available in New South Wales, Queensland, and Victoria, with plans to expand to South Australia and Western Australia in the near future.
