90% Home Loan
Most first home buyers and many investors choose to borrow 90% of the purchase price, why?
Lenders are less conservative with this type of home loan because there is some equity in the property right from the beginning.
That being said you will still have to meet normal credit guidelines and serviceability requirements to get your loan approved.
Do you qualify for a 1.40% rate discount?
One of our lenders has come out with a discount that is well ahead of the other banks. This is a special offer and will be removed from our website when it is no longer available.
Interest rate discount criteria:
- One lender currently has a 1.40% discount as a special offer for all loans over $500,000 & 1.30% for all loans over $250,000 up to $500,000!
- Purchases and refinances are both accepted.
- You do not need genuine savings if you are paying rent or can otherwise prove that you can manage your money well.
- You are borrowing no more than 90% of the property value plus Lenders Mortgage Insurance – LMI (up to 95% on a case by case basis).
- You must have been in current your job for at least 3 months, with 24 months in the same line of work.
- You have a perfect credit history.
This may be withdrawn at any time. Please call us on 1300 889 743 or enquire online to talk to one of our mortgage brokers and find out if you are eligible for this offer.
Do I qualify for a 90% loan?
Each bank and non-bank lender in Australia has their own set of lending guidelines that they use to assess your application. The secret to getting your loan approved is in knowing which lender is a good match for you.
So who is eligible for a 90% loan?
- Loan purpose: To purchase, refinance or build an owner occupied or investment property. Some other loan purposes such as debt consolidation are acceptable on a case by case basis.
- Credit history: Minor paid utility defaults and other small defaults are sometimes acceptable if your application is strong in other areas.
- Other debts: You must be paying your current liabilities such as rent, credit cards and personal loans on time.
- Employment: Stable employment is preferred, generally 6 months in your current job or 2 years in the same line of work.
- Income: Your serviceability (ability to pay the loan) must be strong.
- Savings: 5% of the purchase price in genuine savings is not necessarily required by all lenders. No genuine savings applications (deposit from a gift, sale of an asset, etc.) are considered if you have a clear credit history.
Which lender will approve your loan? Call us on 1300 889 743 or enquire online to speak to a mortgage broker that specialises in 90% home and investment loans.
Genuine or non genuine savings?
This is the most important factor to consider when selecting a lender to apply with. Most lenders in Australia require you to have 5% of the deposit saved in a bank account over 3 to 6 months. However, some lenders will allow you to borrow 90% LVR (Loan to Value Ratio) with no genuine savings.
This means that if you have received a gift, inheritance, first home owners grant or even taken out a personal loan (in some limited cases), you may be eligible to borrow 90% LVR with no evidence of genuine savings. The best news is that the rates are the same as that of a regular loan.
Which loan is the best?
Firstly, we work out which lenders you can qualify for a loan with. We do this by asking you to complete a simple generic application form and faxing it to us with your payslips, bank statements and other documents usually required by most lenders.
We then look at your situation the way the lenders do and work out if your deposit size (usually a 10% – 15% deposit) is sufficient to pay the stamp duty, LMI and associated costs with the purchase.
Once we know which lenders are likely to approve your loan, we can then compare the interest rates, fees and LMI premiums they charge to work out which loan is the cheapest and most suitable for you.
Although lenders often have similar professional package interest rates for their 90% home loans, there are often significant differences in their fixed rates, hidden fees and LMI premiums. We have created a Lenders Mortgage Insurance Calculator which you can use to estimate the LMI Premium you would pay with a range of lenders and insurers.
We will typically recommend a shortlist of three lenders that you can then choose the appropriate loan from, be it a pro pack, basic loan, line of credit or fixed rate loan. Please call us on 1300 889 743 or enquire online if you would like one of our mortgage brokers to do the shopping around for you.
Can I get a 90% home loan over $1,000,000?
Did you know that most lenders will only approve a 90% mortgage up to $1,000,000?
They will only allow you to borrow more than this if you have multiple properties as security for the home loan. This is due to policy restrictions from the mortgage insurers. One of our banks has an agreement with their mortgage insurer and so can consider a 90% loan up to $2,000,000 for people who are in an exceptionally strong financial position.
For loans up to $1,500,000 at 90% LVR, it may be possible to borrow a little extra to cover the cost of the LMI premium. However for larger loans the mortgage insurance cannot be borrowed, and so you will only receive around 87% of the property value after LMI has been deducted.
Why only 90%?
Many Australian lenders have limited their maximum loan amount to 90% of the purchase price plus the capitalised LMI premium. The reasons behind this are complex, however in essence, most lenders are concerned about the number of first home buyers with no savings history entering the market and the volatility this may create in house prices.
Another factor is that some banks have been inundated with applications far in excess of what they can normally process. When demand for credit outstrips the supply of funds, banks tend to restrict their credit policy to reduce the number of people applying for loans.
Save a little more to save heaps in LMI!
LMI rates increase significantly when you go over the 90% LVR mark.
Saving just a little more to bring your LVR back to 90% can save you a lot more in LMI.
For example, if you had a $60,000 deposit (in genuine savings) to buy a property worth $700,000, your LVR would be 91.43%.
Bear in mind, this doesn’t take into the costs of completing the purchase such as stamp duty and legal fees.
Nevertheless, for a $640,000 loan at 91.43% LVR, you could be paying over $28,000 in LMI.
If you were to come up with just $10,000 more for your deposit, you could reduce your LMI premium to just over $14,000.
Essentially, you could save more than $14,000 if you had around $70,000 as a deposit.
You’d be more than $4,000 better off by choosing the right lender!
Try our LMI calculator to get an idea of how much you could save.
After that, speak with one of our mortgage brokers so we can do a complete product comparison.
Depending on the amount you’re looking to borrow, the state in which you live in and whether you’re a first home buyer, saving more to reduce your LVR may not necessarily be in your best interests.
How do I apply for a 90% home loan?
Our mortgage brokers specialise in getting tough loans approved. Please enquire online or call us at 1300 889 743 to speak to one of our experienced brokers.