90 percent home loan

90% Home Loans

The most common type of loan for first home buyers and investors buying a property is a 90% home loan. Lenders are less conservative with this type of home loan because there is some equity in the property right from the word go. That being said you will still have to meet normal credit guidelines & serviceability requirements to get your loan approved.

Read on to find out if you qualify for a 90/10 loan and how to get the best home loan deal.

Do I qualify for a 90% loan?

Each bank and non-bank lender in Australia has their own set of lending guidelines that they use to assess your application. The secret to getting your loan approved is in knowing which lender is a good match for you. So who is eligible for a 90% loan?

• Loan purpose: To purchase, refinance or build an owner occupied or investment property. Some other loan purposes such as debt consolidation are acceptable on a case by case basis.
• Credit history: Minor paid utility defaults and other small defaults are sometimes acceptable if your application is strong in other areas.
• Other debts: You must be paying your current liabilities such as rent, credit cards and personal loans on time.
• Employment: Stable employment is preferred, generally 6 months in your current job or 2 years in the same line of work.
• Income: Your serviceability (ability to pay the loan) must be strong.
• Savings: 5% of the purchase price in genuine savings is not necessarily required by all lenders. No genuine savings applications (deposit from a gift, sale of an asset etc) are considered if you have a clear credit history.

Which lender will approve your loan? Enquire online to speak to a mortgage broker that specialises in 90% home & investment loans.

Genuine or non genuine savings?

This is the most important factor to consider when selecting a lender to apply with. Most lenders in Australia require you to have 5% of the deposit saved in a bank account over 3 to 6 months. If you do not meet this requirement then your choice in lenders will be limited, although you will not necessarily pay a higher interest rate. For information on this type of loan please read our no genuine savings page.

Which loan is best?

Firstly we work out which lenders you can qualify for a loan with. We do this by asking you to complete a simple generic application form and faxing it us with your payslips, bank statements and other documents usually required by most lenders.

We can then look at your situation the way the lenders do and work out if your deposit size (usually a 10% deposit) is sufficient to pay the stamp duty, LMI and associated costs with the purchase.

Once we know which lenders are likely to approve your loan we can then compare the interest rates, fees and LMI premiums they charge. Although lenders often have similar professional package interest rates for their 90% home loans, there are often significant differences in their fixed rates, hidden fees and LMI premiums. We have created a Lenders Mortgage Insurance Calculator which you can use to estimate the LMI Premium you would pay with a range of lenders & insurers.

Out of a shortlist of around three lenders you can then choose the appropriate loan that suits you, be it a pro pack, basic loan, line of credit or fixed rate loan. Enquire online if you would like one of our mortgage brokers to do the shopping around for you.

Why only 90%?

Many Australian lenders have limited their maximum loan amount to 90% of the purchase price plus the capitalised LMI premium. The reasons behind this are complex, however in essence most lenders are concerned about the number of first home buyers with no savings history entering the market and the volatility this may create in house prices. This is the primary reason why many lenders have withdrawn 95% loans and all lenders have withdrawn 100% loans.

Another factor is that some banks have been inundated with applications far in excess of what they can normally process. When demand for credit outstrips the supply of funds, banks tend to restrict their credit policy to reduce the number of people applying for loans.

Talk to a mortgage broker

Please enquire online to speak to one of our mortgage brokers that specialises in 90% home loans.