Limited Deposit and don’t qualify for the government guarantee scheme? Up to 100% LVR loans available

Marty McDonald

Did you know that there are loan options out there to get you into a property with a limited deposit?

You may have read our prior post about the government guarantee schemes and how great they are but unfortunately not everyone qualifies. Your income(s) may be too high or the property you wish to purchase may be above the maximum threshold. Or you may not be a first home buyer.

Fear not we have other options!

  • *100% LVR loans
  • *95% LVR Loans

100% loans

We have access to a specialist lender who allows borrowers to finance a property with 2 separate loans. A traditional 80% loan via a standard lender and a 2nd loan for the other 20%.

Purchasers still need some funds to cover stamp duty, normal legal and settlement costs and a lenders “risk” fee which is about 50% of the traditional lender mortgage insurance cost.

This type of set up is suited to those with a high income as they are required to pay down the 2nd loan over a 15-year term (as opposed to the traditional 30 years).

Note also that this loan structure can be used for any LVR between 85% and 100% although you would typically only consider this option if borrowing above 90%.

95% loans

The other option for those with limited deposits is a 95% loan which is available through most lenders as the one loan product. Where these loans differ between lenders is what the lender does with the lender’s mortgage insurance (LMI) premium.

We have a few lenders who will add the LMI on top of the loan amount, meaning the loan amount available to go towards the property is the true 95% with the premium borrowed above that. LVR’s are available up 97% with one major bank and 100% with a non-major. Typical LMI premiums at 95% LVR range from about 3% to 5% of the loan amount depending on the value of the property.

Other lenders have a hard cap of 95% LVR meaning the LMI premium cant be added to the loan amount if the end LVR exceeds 95%. If effect this means the loan amount available to go towards a purchase is capped at about 91-92% once the LMI is factored into the loan amount. Thought of another way the loan is for 95% of the property value but the LMI premium is effectively paid for by the borrower like other external costs such as stamp duty.

Let us do some number crunching?

Give us a call or Book an appointment with me to go over options and how much deposit you would need to get into a property this way.

About the Author: Marty McDonald is principal of mortgage broker “Mortgage Experts”. Marty specialises in assisting active property investors with loan structuring advice and implementation as well as helping credit worthy borrowers with slightly outside the box income and employment situations. Find Marty on  and LinkedIn.
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