DM> I hadn't followed the details too closely, as I am not in the process
DM> of chasing mortgages, but from all the media, the definite impression
DM> was that 20% was required, as opposed to the previous 10%, 5%, or
DM> 2.5%.

RS> Nope, it aint that simple.

BG> True, there are still ways and means.  A local finance broker did a
BG> letterbox drop the other day, stating that he could still get housing
BG> loans at 8.75% rates with just 5% deposit, no security required, and
BG> if the deposit is 10%, HLIC insurance is not necessary.

BG> Now from my short period with real estate, I can assure you that he
BG> is doing something dodgy, and possibly bordering on illegal.  Dunno
BG> what trick he's using (there are many), but the usual one is to
BG> overvalue the property to buggery so the on-paper deposit paid is say
BG> 20%, even though only 5% of the real value is actually paid by the
BG> buyer, the end result being that the loan amount ends up being 95% of
BG> the actual value, not the inflated value.

BG> It works (one of the blokes I worked with was organising these deals
BG> at the time), but the legality of this always worried me immensely
BG> (and naturally, the buyer is also paying higher up-front costs (stamp
BG> duty etc.) based on the overvaluation.

BG> That's why I only stayed with them for 3 months.  ;-)

Yeah, there are always ways around the system. I did it myself when I
was building my house, 0% deposit actually. Mainly coz I was interested
in how feasible it was and I was earning a better rate on the money I
would have otherwise used as a deposit than I had to pay in interest.
Worked very well actually.

--- PQWK202