What is my LVR?

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Rodrick
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What is my LVR?

Postby Rodrick » Fri Feb 15, 2019 11:28 am

Hi, I’m the HR manager for a mid-level cyber security firm. I’m looking to purchase a 2-bedroom house in the heart of Elsternwick, VIC currently valued at $810,000. If I can afford to pay a deposit of $75,000, what will be my LVR?

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Otto Dargan
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Re: What is my LVR?

Postby Otto Dargan » Fri Feb 15, 2019 12:45 pm

Hello Rodrick. Welcome to the forums.

The Loan to Value Ratio (LVR) is the amount you’re borrowing, represented as a percentage of the value of the property being used as security for the loan.

In your case, with a deposit of $75,000 for a property valued at $810,000, your LVR will be 90.74%.

Lenders place a high emphasis on the LVR when assessing a home loan application as the lower the LVR is, the lower the risk to the bank.

Banks consider it high risk when borrowing over $500,000 at 90% LVR or higher.

Luckily, they have specific policies to assist borrowers with low deposits.

You generally need to be in a good financial position, with stable employment, a regular income and a clear credit file.

Banks also protect themselves throughLenders Mortgage Insurance (LMI), a one-off premium charged by the lender to protect themselves in the event that you default on your home loan.

Default rates are generally higher when borrowing closer to the full property value.

That's because even if you make your repayments on time, your LVR can be more easily affected by property market fluctuations i.e. your property could soon be worth less than the mortgage balance.

Speak with one of our experienced mortgage brokers today to find out if you qualify for a high LVR or low deposit home loan.

Give us a call on 1300 889 743 or fill in our free assessment form.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Rodrick
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Joined: Fri Feb 15, 2019 11:26 am

Re: What is my LVR?

Postby Rodrick » Fri Feb 15, 2019 2:17 pm

Okay, that sounds doable. So, how do I qualify for a 90% LVR home loan?

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Otto Dargan
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Re: What is my LVR?

Postby Otto Dargan » Fri Feb 15, 2019 6:03 pm

Hi Rodrick,

The Loan to Value Ratio (LVR) that the banks will allow you to borrow depends on the loan amount you need, the location of the property, your credit history and the type of home loan you’re applying for.

Generally, full doc (income evidence provided) applicants can borrow upto 80% LVR. However, strong applicants can potentially borrow up to 90 to 95% LVR.

Low doc applicants (self-employed with no income evidence) can borrow up to 60% and possibly up to 80% if they’re in a strong financial position.

Alternatively, it is possible to borrow 100% LVR with a guarantor home loan, the only genuine no deposit home loan solution available on the market.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Rodrick
Posts: 3
Joined: Fri Feb 15, 2019 11:26 am

Re: What is my LVR?

Postby Rodrick » Fri Feb 15, 2019 6:52 pm

Ok. So my LVR of 90% means that I will be charged LMI. How much is the LMI going to cost me?

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Otto Dargan
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Re: What is my LVR?

Postby Otto Dargan » Fri Feb 15, 2019 8:19 pm

Hi Rodrick,

Lenders Mortgage Insurance (LMI) generally applies to home loans which are above 80% LVR.

Please use our LMI calculator to find the cheapest LMI premium from the most competitive lenders on our panel. By choosing the right lender you can save thousands of dollars.

Give us a call on 1300 889 743 or fill in our free assessment form.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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