Mortgages Over $1,000,000

personOtto Dargan access_timeMarch 13, 2012

Many lenders have changed to stricter policies on loans over 80% of the property value for mortgages over $1 million. This is due to changes made by the lenders mortgage insurers.

The insurers have their own restrictions and will not insure the banks and lenders if you are borrowing over a certain amount. If the banks are not insured for a higher risk loan they will decline the application.

Therefore, in order to be assessed for a loan you will need to be in a strong overall financial situation. This includes your employment and income as well as single or multiple securities.

What are the lending criteria?

When borrowing more than 1 million dollars, both 90% and 95% LVR loans have strict lending criteria. These include:

  • Strong employment: Ideally, the banks prefer that you have spent more than a year in your current job. If you are self-employed, lenders prefer over two years of consistent work in your business.
  • Proven genuine savings: You need to have saved or held a minimum of 5% of the purchase price for at least 3 months prior to applying for a loan.
  • Good asset position: Your debts need to be in very good order and easily serviceable. As little debt as possible is ideal.
  • Good credit score: In particular, no defaults are permitted and you must not have too many enquiries on your credit file. You can use a Credit score calculator online to find out your score.
  • Good quality single security property in a prime location: Ideally, a house or unit in a capital city. Due to the restrictions of the mortgage insurers you may need to own multiple properties as security.

In order to get approved, you need to find the lenders that will assess your situation more favourably. We specialise in loans over $1,000,000 at 90% and 95% LVR. Please enquire online or contact us on 1300 889 743 and we can help get your mortgage approved!

90% home loans over $1 million

At 90% LVR, $1 million is the maximum most banks are willing to lend. You may be able to borrow above this amount however you need multiple security properties, at least two.

You may be able to borrow a little more for loans of up to $1,500,000 at 90% LVR to cover the cost of the LMI premium. However for anything above this amount up to a maximum of $2,000,000, you are unable to borrow more for lenders mortgage insurance (LMI).

This means that for a 90 percent home loan over $1 million, you will receive approximately 87% of the property value after deducting LMI.

95% home loans over $1 million

Whilst there are a number of lenders willing to lend up to $1 million at 95% LVR, most will only approve up to $700,000 or $800,000.

Although the lenders mortgage insurer restrictions prevent most borrowers having more than $1,000,000, there is one lender that has a special deal with its insurer. For people in an extremely good financial position, they can consider loans up to $1.5 million at 95% LVR.

The major difference when borrowing these sums with a 95 percent home loan is that you cannot borrow the cost of LMI. You must pay for it from the loan itself. Therefore the borrower will receive approximately 91.5% LVR.

Do you have a property in mind? We can help you apply for a $1 million loan at 90% or 95% LVR. Contact us today on 1300 889 743 or enquire online today.

Why are banks conservative for loans over $1 million?

Many lenders are concerned about the market volatility created by the number of first home buyers with no savings history entering the market. This is the primary reason why many lenders have withdrawn 95% loans.

With loans over $1,000,000 it is not just the banks that are conservative, but it is also the mortgage insurers. The risk associated with loans of this size is normally deemed too great unless the borrower’s financial situation is incredible. If the mortgage insurer does not insure the bank against a loan, the bank will not approve the application.

Loan to Value Ratio (LVR)

LVR is the percentage of the property value that you borrow. For example, at 80%LVR you will need a 20% deposit. If you are paying LMI on your loan, some banks and lenders will allow you to borrow a little more to cover the insurance. However, in many cases the LMI will be taken out of the loan amount and you will need a deposit greater than 20%.

The cost of LMI

Lenders mortgage insurance insures the lender, NOT the borrower, against a default on the loan. This lowers their risk for the lender, which is why they are willing to give borrowers loans above 80% LVR with LMI.

For loans over $1 million, LMI becomes extremely expensive. It does not just include the increase in the absolute value of the insurance as the loan size increases, LMI also includes the risk the mortgage insurer places on high LVR loans of that size.

Apply for a loan today!

At Home Loan Experts we have brokers that specialise in loans over $1,000,000. As we work with many different banks and lenders, we know which are willing to assess applications at 90% LVR and 95% LVR.

Contact us today on 1300 889 743 or enquire online and one of our brokers will contact you.

  • crotty

    Aren’t there any no genuine savings options available?

  • Hey crotty, since borrowing over $1 million poses a high risk to the lender, they are quite conservative as to the requirements and so most lenders require you to show genuine savings if you go over 85% LVR. However, you can go guarantor and not need to show genuine savings although borrowing a high amount will mean you have to meet additional credit criteria.

  • pasley

    I’ve switched jobs just last week but it’s in the same industry. Can I still qualify for a 90% lend?

  • Hey pasley,

    Ideally, for a 90% lend on a loan amount of over $1 mil, the banks prefer that you have spent more than a year in your current job. However, if you have changed jobs, then most lenders will require that you have been in your current job for at least 3 months, with 24 months in the same line of work.

  • Vicky G

    Hi, I’d like to get an estimate on the LMI premium that I have to pay for a loan of $1 mil at around 83% LVR.

  • Hi Vicky G,

    Using our LMI calculator, we find that you’ll likely have to pay from up to $12,980 in LMI premium for that loan amount. However, one of our lender is able to waive it off completely. Note that we filled in some info ourselves such as a yes to 5% genuine savings, FHB and buying in NSW. Please have a crack at our calculator to find out for yourself, and you can test out any other scenarios you like as well. Here’s the link to the LMI calculator:

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  • Saritha Ligon

    Would you be able help me to estimate the LMI premium that we have to pay for a loan of $1,088,500 which is around 86% LVR?

  • Hi Saritha,
    For a loan amount of 1.088 mil and 86% LVR, the LMI would vary from 18-20,000. We could help you choose the least LMI and a suitable bank for your home loan. Just call us on 1300 889 743 or enquire online and find out how we could help you get a suitable mortgage.