Saving up a deposit is often the most challenging part of purchasing a home, with it often taking years of discipline and budgeting. There is a lot of talk about saving up a 20% deposit, but there are actually quite a few very good offers available for those who are looking to borrow a maximum of 90% LVR for their home loan
Read on to discover everything you need about 90% LVR Home Loans, their requirements, the benefits and the potential savings from reaching this LVR milestone.
With access to over 40 home lenders on our panel and over 13 years of industry experience, Simplifi Lending are experts in finding you the right home loan deal for your circumstances. While most lenders will lend up to 95% of the property value, there can be some substantial savings if you can reach the 90% LVR.
Different lenders also have different risk appetites at this LVR, with some offering excellent rates and lower fees than other lenders to attract these applicants. Let us do the legwork and research for you and match you to an amazing home lender!
When you are purchasing a property with a low deposit, many lenders have a requirement for what is called ‘genuine savings’. This means that the savings (usually 5% of the property value) must be funds that are saved up over a period of at least 3 months and cannot be sourced from certain means like a gift, the sale of a car/other asset or borrowed from a personal loan etc.
Some lenders will remove this requirement once the total loan (including LMI) is under 90% LVR, meaning that funds sourced from sale of an asset, gifted funds and even personal loan funds can be accepted for the application. Chat to our mortgage brokers to find out your the deposit requirements and lenders who have this policy.
Many lenders do not negotiate the home loan rate on offer for 95% LVR home loans. However, once your total loan is under 90% LVR, this changes substantially. While the rates are not quite as sharp as 80% LVR and under, they can be much sharper than those on offer at higher LVRs.
As part of your preliminary assessment, your mortgage broker will advise your lender options and can highlight the potential savings for you here.
Many lenders have a ‘soft cap’ built into their lenders mortgage insurance premiums for a 90% LVR home loan. As soon as the total loan drops below 90% of the property value, the LMI premium payable to the lender drastically decreases. There are also some tips and tricks your mortgage broker can show you to potentially reduce this even further.
Some particular professions may even qualify for a complete LMI waiver- check out our No LMI Home Loans page for more information and to see if you may be eligible.
Being able to access the property market and purchase your home with a 90% LVR home loan could save you years over saving for longer to try and get a 20% deposit. This gets you onto the property ladder sooner and provides a hedge against further house price increases.
The significant interest rate reduction from 95% down to 90% LVR can substantially increase your borrowing capacity and potential purchasing power. This is almost solely due to the lower rate reducing your interest costs and home loan repayments.
There are certainly still some limitations to take into account when considering a 90% LVR home loan. These include:
Even though the LMI premium may be substantially reduced, in most cases you will still have to pay lenders mortgage insurance if you are borrowing 90% of the property value. This premium is non-refundable and is often capitalised on to the loan. A very common setup for a 90 % LVR home loan is 88% base loan + an LMI premium of roughly 1.5%-2%.
Depending on your chosen lender and the offers available, you may still need to show evidence of genuine savings at 85%, 90% or 95%. Not all lenders offer a waiver of this requirement at 90% LVR. For more information, chat to one of our expert mortgage brokers.
Even if you meet the lender’s deposit and savings requirements, your application still needs to be properly packaged and pass a credit assessment with your chosen lender. They will take into account your assets, liabilities, income, expenses, other commitments and desired loan amount in this assessment. We will conduct a detailed preliminary assessment covering all of this as part of our home loan application process.
Any lender will conduct a credit check on you as part of your home loan application. This needs to be clean and show good repayment conduct, credit worthiness and no defaults or court judgements relating to any other commitments you may have.
Simplifi Lending are experts in the requirements, offers and policies available across our panel of over 40 top home lenders. We will review your information, calculate your figures, prepare a free, detailed preliminary assessment and show you the top home loan options that meet your personal circumstances. Let us take the hassle out of getting your home loan approval- get in touch today!
In addition to the standard requirements for most home loan applications, there may be a few additional items required for 90% LVR home loans. The requirements include:
If the lender you are applying with requires proof of genuine savings, you may need to provide some additional documentation. This can include:
If any of these items are required, your mortgage broker will talk you through whichever apply to you.
All lenders will be required to positively identify you for any home loan application. Suitable documents may include:
Your broker will confirm which ID is required to support your application.
We will organise a valuation on your security property with your chosen lender as part of your application. Often, our recommendation is we look to get this before we apply if possible, to make sure the property value is sufficient for the proposed transaction.
Are you ready to get started with your 90% LVR home loan application? Contact us today to speak with an expert mortgage broker and book your no-obligation Preliminary Assessment.
You can definitely look to refinance if you are at a 90% LVR. That being said, it can often be uneconomical to do so as you often would have to pay LMI with the new lender to do so. Our first suggestion here would usually be to contact your current lender and ask them to review your home loan pricing before looking at refinancing.
Yes- the amount you are borrowing for your purchase has no bearing on the stamp duty payable. Stamp duty is essentially a tax/fee paid to the relevant state government as part of purchasing a property.
In most cases, yes, LMI is payable at a 90% LVR. The exceptions to this may include:
If you think you may meet these criteria, or would like more information on them, please contact us.
