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85% Home Loan

Many home buyers and investors have saved a significant deposit or have received help from their parents. If you are in this position then you may qualify for an 85% home loan.

Unlike 90% or 95% loans, the qualifying criteria is less strict and the Lenders Mortgage Insurance is significantly cheaper. In fact, in some cases the LMI premium can even be waived!

Can I avoid LMI?

Two of our lenders currently have a special where they are offering loans for up to 85% of the property value with waived LMI!

  • Max loan $1,000,000 at 85%.
  • Max $1,500,000 in total loans with no LMI.
  • You must have a clear credit history.
  • You may need to meet minimum income criteria with some lenders.
  • This is for low risk borrowers only, strict criteria apply

This is an unbelievable discount that could save you thousands of dollars in mortgage insurance!

You can read the eligibility criteria on our no LMI page. Call us on 1300 889 743 or enquire online for more information.

Waived LMI or negotiated interest rate?

What are the LMI premium rates on an 85% LVR home loan?

Here’s the LMI rates for different home loan sizes from one of our banks:

  • Up to $300,000: 0.70%
  • Up to $500,000: 0.88%
  • Up to $1,000,000: 1.23%
  • Over $1,000,000: 1.36%

If you’re borrowing up to $500,000 it’s usually better to get a negotiated interest rate! The cost of LMI is relatively low and a rate discount can easily beat the saving in your mortgage insurance premium.

If you’re borrowing over $500,000 or can pay off the loan quickly then it’s best to apply for a lender with no LMI! Then once you’ve paid the loan off to 80% or your property has grown in value then you can refinance to a low rate home loan.

Please call us on 1300 889 743 or enquire online and we’ll work out the best option for you.

What are the tips for borrowing 85%?

Most people who borrow over 80% of the property value know the importance of shopping around to get a good deal. What is it you should be looking for when comparing mortgages?

  • Do you meet the lender’s credit criteria? In particular, does the lender have a genuine savings policy (read below for more information).
  • Have you compared the LMI? One of our lenders will waive the LMI for loans up to 85% of the property value. If you qualify for this offer you can save thousands!
  • Will your lender allow you to capitalise the LMI premium?
  • In addition to this, don’t forget to compare all other aspects of the loan such as the interest rate, repayment terms, features and to ask about any hidden fees or charges.

Do I qualify for an 85% home loan?

These days, banks are becoming more particular about the customers that they lend to. So what are Australian lenders looking for?

  • Clear credit history: This means that your credit file has no blemishes whatsoever and you have paid all of your bills such as rent, credit cards, personal loans and other debts on time, every time for the last 6 months.
  • Stable employment: In most cases, you must have been in your current job for the past 6 months or more to qualify but sometimes an exception can be made to this policy.
  • An excellent income: Lenders are more conservative when assessing 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.
  • Genuine savings: Many lenders require you to have saved 5% of the purchase price but not every lender has this requirement! Some will allow you to borrow with no genuine savings!

If you don’t fit the box then please enquire online to speak with one of our mortgage brokers that specialises in loans over 80% of the property value.

Do I need genuine savings?

Some lenders require evidence that you have saved 5% of the purchase price in either a savings account, shares or a term deposit. However, other lenders can consider a gift from your parents or a lump sum deposit as evidence of savings! This means that in most cases, you can borrow 85% with no genuine savings.

Speak to our mortgage brokers on 1300 889 743 or enquire online and a member of our expert team will help you get the best package!

Compare the LMI, not just the rate

Did you know that each lender has different LMI premium rates? Often two loans with the same rate will actually have very different LMI premiums and, in some cases, the difference can be in the thousands of dollars.

We recommend that you use our LMI premium calculator to compare lenders and find out how much you are likely to pay in LMI.

Did you know that very low risk borrowers may be eligible for significantly discounted LMI? The criteria for this type of loan is very strict so find out more on our discounted LMI page.

Many people who apply for an 85% loan can qualify for a special LMI discount or pay no LMI at all! These discounts are only available from a select few lenders that are in good funding positions.

Which lenders are most competitive?

Each lenders’ pricing changes on a regular basis. We recommend that you call us or enquire online so one of our mortgage brokers can help you to compare the different options available.

How big of a deposit do I need?

As a general rule, first home buyers will need around 15% of the purchase price in funds to be able to make up the shortfall between the loan and the purchase price. Second home buyers and investors will generally need 19% of the purchase price. This amount can vary depending on the first home benefits and stamp duty rates applicable for your state.

Talk to a specialist mortgage broker

Our mortgage brokers are extensively trained in comparing loans that are for over 80% of the property value. Did you know that most other mortgage brokers are not even aware that each lender charges different LMI premiums? Fewer still actually compare LMI as part of the loan selection process!

Please call us or enquire online and one of our expert mortgage brokers can help you to get pre-approved for an 85% home loan.

  • Daisey

    Hi, regarding the 85% home loan, I believe I meet all the criteria to qualify for it. Do I have the option to choose the LMI capitalization or do the different banks have different policies regarding this? I want more money now, so I want LMI to be added on my loan rather than deducting the LMI from the loan amount?

  • Hi Daisey,

    You could get waived LMI if you’re certain professional, however you need to have clean credit history and other stringent criteria of the lender needs to be fulfilled. You could refer to https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-discounts-and-no-lmi/ for more information on this.

    Generally, lenders deduct the LMI from the total loan amount, however if you want LMI to be capped, then we could increase the loan amount accordingly so that you could obtain the desired loan amount. Also, you may require a smaller deposit by capping your LMI since you are not paying from the money from your deposit.

  • There are new rate discounts available at 85% LVR which may be cheaper than avoiding LMI. Please contact us on 1300 889 743 for the details.