Hi,
I want to purchase an investment property in Norlane, Victoria (postcode: 3214) and want to borrow a 95% loan to reduce my buying costs. I currently earn $600k with no rent as confirmed with my broker. I am sure I can afford the loan.
However, my broker has recommended that a 95% loan may not be possible to get approved and LMI costs will be charged too high. The purpose of the purchase is to buy and hold existing property, and subdivide and sell the land from out the back. Again, I am quite certain that my financial position does allow me to take this chance.
I wanted you help in confirming whether it is possible and what costs would be involved? Please.
Thanks
Can I get a 95% loan for first time property investment?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Can I get a 95% loan for first time property investment?
Hi ka2jo7,
Thank you for the enquiry. You would be happy to know there are lenders out there that will consider 95%+ LMI onto the loan for your investment.
Most lenders at the moment will only consider maximum 95% with no cap LMI.
The major basic requirement is you must have 10% in genuine savings.
Other criteria to keep in mind are
Hope this helps,
Otto
Thank you for the enquiry. You would be happy to know there are lenders out there that will consider 95%+ LMI onto the loan for your investment.
Most lenders at the moment will only consider maximum 95% with no cap LMI.
The major basic requirement is you must have 10% in genuine savings.
Other criteria to keep in mind are
- A clean credit history.
- Stable employment.
- An above average credit score.
- Some lenders would want to see equity in other properties if you are borrowing more than 90%.
Hope this helps,
Otto
Re: Can I get a 95% loan for first time property investment?
Hey Otto,
That was definitely helpful. I don’t understand why do I need to have 10% genuine savings? Will a 5% saving not suffice? Also, this is my first time investing so does the last criteria apply to me too?
Any word of advice will be much appreciated.
Thanks.
That was definitely helpful. I don’t understand why do I need to have 10% genuine savings? Will a 5% saving not suffice? Also, this is my first time investing so does the last criteria apply to me too?
Any word of advice will be much appreciated.
Thanks.
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Can I get a 95% loan for first time property investment?
Hello again,
The reason why most lenders look for 10% in genuine savings are because of the costs involved. To buy an investment property, you need to have 5% in the savings to cover for the deposits and another 5% to cover the purchasing costs like stamp duty.
If this is your first investment property then the final criteria does not apply to you. Please be advised that loans such as these are considered to be high risk by financial institutions so you need to prove that you really are in a strong financial condition to get approval. Almost every lender will want to see at least 5% in genuine savings.
Otherwise, you can even consider lowering the LVR to 90%.
Please feel free to talk to us on 1300 889 743 if you have any further queries or confusions.
The reason why most lenders look for 10% in genuine savings are because of the costs involved. To buy an investment property, you need to have 5% in the savings to cover for the deposits and another 5% to cover the purchasing costs like stamp duty.
If this is your first investment property then the final criteria does not apply to you. Please be advised that loans such as these are considered to be high risk by financial institutions so you need to prove that you really are in a strong financial condition to get approval. Almost every lender will want to see at least 5% in genuine savings.
Otherwise, you can even consider lowering the LVR to 90%.
Please feel free to talk to us on 1300 889 743 if you have any further queries or confusions.