Home Loan Rate – Australia

Lenders Mortgage Insurance or LMI is often a must once the loan to value ratio (LVR) of the property is 80% and up.  However there are a number of loans that can go over 85% LVR but will not require you to pay LMI.  These types of loans can save you a lot of money, as you need not to worry about LMI premiums.  There are only certain fees to pay in exchange for the fact that there is no LMI being charged to you.

Another tested way to avoid LMI altogether is to either make a sizeable deposit with the bank.  This usually amounts to 20% of the total value of the property.  You can also avoid going above 80% LVR to keep banks from charging you LMI.  These are two tried and tested ways of avoiding additional LMI costs and paying no LMI whatsoever.

This means that if you would like to get into the real estate market much earlier, yet do not have any funds to make a deposit, or would really like to get a loan of 80% or more of the property’s total value, then expect to be required to pay LMI as most banks and lenders will charge you LMI premiums.

The experts on home loans have access to those banks and lenders who are willing to go over 80% and yet do charge no LMI whatsoever.  However, be warned that interest rates and additional fees may be applied, so the costs may actually be the same as paying LMI.  This means it would be best to make use of a mortgage insurance calculator before getting a loan with no LMI.  For all you know, it could cost much less than getting a loan without LMI in the first place.

If you do need to apply for a loan where mortgage insurance will be applicable then you will be subject to additional credit criteria. As a general rule you may need to:

• Have 5% in genuine savings.
• Have a clear credit history.
• Have stable long term employment.
• The property must be in good condition in a major area (capital city / regional centre).
• Pass a credit scoring algorithm.

If you are applying for a mortgage over 80% of the property value then discuss your situation with a qualified mortgage broker to find out where you stand. Putting in several applications with different banks will lower your credit score for future applications. The best strategy is to go for one application, and one approval.