90% LVR Home Loan
90% LVR home loans can be found with almost all lenders in Australia in 2012. The lenders who offer 90% LVR home loans offer them on slightly different terms from one another. Hence it’s important to choose the right lender when buying your property at 90% LVR.
What are the costs with buying a home at 90% LVR?
Buying a property at 90% LVR does not necessarily mean you will pay extra fees or interest. A 90% LVR home loan is generally priced the same as a normal loan with little or no fees, and the only real additional cost is usually Lenders Mortgage Insurance.
The Lenders Mortgage Insurance or LMI cost is paid by the borrower and protects the bank against potential loss as a result of value loss from the property should the borrower default and the lender forecloses on him.
What are the costs of the mortgage insurance on a 90% LVR home loan?
The cost of mortgage insurance at 90% LVR differs depending on the loan amount. As a basic guide, the cost of mortgage insurance for a lower loan amount is generally less as opposed to a larger loan. The lenders mortgage insurance premium is calculated as a percentage premium on the total amount being borrowed. It is worth noting that different lenders will offer different lenders mortgage insurance premiums for different loan amounts, and LVR bandwidths. Hence we recommend speaking to us directly to compare the cost of the mortgage insurance at 90% LVR between different lenders.
The below table will give a basic approximate estimate of LMI cost on a 90% LVR home loan
|Loan Amount||$0 – $300k||$301K – $500K||$501K – $750K||$751K – $1M||$1.01M – $1.5M|
|At 90% LVR||1.05%||1.41%||1.70%||1.60%||1.88%|
Therefore with a loan amount of $470,000, the LMI is calculated as $470,000 x 1.41% = $6,627.
Looking at the cost of mortgage insurance for a 90% LVR home loan over $750,000, one realizes that the LMI premiums actually come down slightly. It is generally understood and accepted that people who borrow at this loan amount have a less likely chance of defaulting and therefore being foreclosed by the bank.
Can I borrow the cost of the mortgage insurance on a 90% LVR home loan?
You can borrow the mortgage insurance on top of a 90% LVR home loan. This can bring the total LVR to approximately 92% LVR on completion. In most cases we call this capitalising the LMI.
Can I get a risk fee charged instead of LMI for a 90% LVR home loan?
There are two lenders who will allow a risk fee charge instead of LMI for a 90% LVR home loan. This risk fee is generally 30-40% cheaper than normal LMI, and the borrower must satisfy the lender’s criteria to allow this to happen.
Do I need genuine savings when buying a property at 90% LVR?
You do not need genuine savings when buying a property at 90% LVR. However, most lenders will ask you to have genuine savings at 90% LVR, there are a few lenders who will not ask and will approve this loan for no genuine savings.
Do I have to pay a higher interest rate for a 90% LVR home loan?
With most lenders, you will not pay a higher rate for a 90% LVR home loan. Therefore you will get a normal rate just like any other loan with same interest rates. There are a small number of lenders who offer very small interest rate discounts to loans which are under 90%. This is not very common though as most lenders price these loans the same as normal loans.
Can I get a 90% LVR home loan if I was on probation?
You can get a 90% LVR home loan approved even if you were on probation. This type of loan is only found with a very small number of lenders and must be submitted correctly upfront to improve its chance of approval.
Can I get a 90% LVR home loan with a low doc loan policy?
You cannot get a 90% LVR home loan using low doc home loan policy with any lender in Australia in 2012.
If I had bad credit, can I get a 90% LVR home loan?
If you had bad credit you can still get a 90% LVR home loan. It’s best noted that not all lenders will accept a 90% LVR home loan if you had bad credit. Most lenders who will do a home loan at 90% LVR are generally non conforming lenders who specialize in bad credit. However, there is a very small number of normal lenders who will consider lending you at 90% LVR if the bad credit history is minor and can be adequately explained.
Can I refinance and debt consolidate using a 90% LVR home loan?
You can refinance and consolidate other debts using a 90% LVR home loan. Most lenders will allow this provided that the debts being refinanced are conducted satisfactorily, the property is suitable security, and the borrower can demonstrate affordability.
In what names can I borrow using a 90% LVR home loan?
You can borrow using any of the following names for a 90% LVR home loan:
- Personal name
- Company name
- All Trust type names
- Partnership name
- Business name
At Mortgage Providers, our staff have access to the latest updates knowing where the cheapest and most flexible 90% LVR home loans are. We can guide you through what each lender offers and how that offer will translate to you in real language and dollar terms.