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Looking at borrowing 95% - Can you make this work?

Posted: Mon Apr 29, 2019 3:52 pm
by Sue
Hi, I’m a PAYG painter earning 65k a year. I have $25,000 in savings and a close relative is gifting me $35,000 for the deposit. I’m looking at borrowing $475,000 on a property valued at $500,000. This will be my first home purchase. I’m currently paying $500/month on rent.
Can you make this work?

Re: Looking at borrowing 95% - Can you make this work?

Posted: Mon Apr 29, 2019 4:10 pm
by Otto Dargan
Hello Sue. Welcome to the forums.

As a general rule, first home buyers will need to contribute around 5% to 10% of the purchase price as a deposit. The actual amount varies depending on the first home owners grants and the stamp duty concessions available in each state.

An important note regarding the gift from your relative, not all lenders accept a gifted deposit from relatives, they prefer the gift giver to be a parent or an immediate family member. Relatives can be considered on a case by case basis.

When borrowing 95% of the property value ($475,000) banks are strict in their requirements, however, we have lenders who can help if you’re a little outside the box:
  • No genuine savings: Most lenders prefer if you’ve saved up the deposit yourself but this isn’t a requirement with all of our lenders when borrowing 95% plus the cost of Lenders Mortgage Insurance (LMI).
  • Property location: Remote locations can be considered over metro locations when borrowing 95% including LMI.Check your location.
  • A small amount of debt is acceptable: Lenders prefer borrowers who don’t have a large amount of unsecured debts. If you have less than 10% of the purchase price in personal debts some lenders can still consider you for a 95% mortgage.
  • Credit scoring: Each lender will perform their own credit scoring.
  • Credit history: Having some black marks on your credit file is okay as long as you can provide a reasonable explanation for the adverse listing.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a 95 percent home loan.

Cheers,

Re: Looking at borrowing 95% - Can you make this work?

Posted: Mon Apr 29, 2019 5:30 pm
by Sue
Okay, so the lender is going to do their own credit scoring for my home loan.
How do I make sure that this is not going to be an issue?

Re: Looking at borrowing 95% - Can you make this work?

Posted: Mon Apr 29, 2019 6:15 pm
by Otto Dargan
Hi Sue,

Yes, almost all lenders will do their own credit scoring to assess loans at 95% Loan to Value Ratio (LVR). If you fail their credit score then it’s unlikely that you’ll be approved.

You can use our credit score calculator to find out if this will be a problem for your home loan or not.

Cheers,

Re: Looking at borrowing 95% - Can you make this work?

Posted: Mon Apr 29, 2019 6:48 pm
by Sue
Got it. Can you also give me an estimate of how much LMI will I be paying?

Re: Looking at borrowing 95% - Can you make this work?

Posted: Mon Apr 29, 2019 7:06 pm
by Otto Dargan
Hi Sue,

Depending on the lenders you qualify with and the figures you’ve provided so far, the LMI premium can be anywhere between $14,450 and $16,198.

You can use our LMI calculator to get an estimate of the LMI applicable.

Some lenders will allow you to capitalise the LMI. LMI capitalisation is where the LMI premium is added on top of your loan which means you have more funds available to use.


Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a 95 percent plus LMI home loan.

Cheers,