Yes, you have heard it right.
It is known as Lenders Mortgage Insurance (LMI) and is a one-off insurance payment which protects the lender if you default on your home loan. Most lenders charge you LMI when the Loan to Value Ratio (LVR) is 80% or more. However, some lenders allow you waived LMI loans when borrowing up to 85% of the value of the property.
Since you are planning on borrowing 85% LVR, it may be possible for you to have your LMI waived. For this, however, you would need to meet the following criteria:
- Perfect credit history: You should be paying all your bills such as rent, credit cards, personal loans and other debts on time every time for the last six months.
- Stable employment: In most cases, lenders require you to have been in your current job for six months or more.
- A good income source: Lenders want you to have a job with good pay so that they can be sure about your ability to repay any loan over 80% of the property value.
- Strong asset position: Lenders want to see that you have a good asset position relative to your age and income.
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