95% LVR capitalise Lenders Mortgage Insurance
Am I Eligible for a 95% LVR with Capitalised Lenders Mortgage Insurance?
With rent payments and other household expenses seemingly always on the rise, saving a deposit for a home purchase can feel impossible, especially as no-deposit home loans are no longer available to applicants who don’t have a guarantor. However, you can consider applying for a loan with a 95% LVR. Capitalise lenders mortgage insurance (LMI), and you only require a minimal deposit. Because you don’t need to pay up front for your LMI with this type of loan, you will in effect end up with a 97.5% home loan.
Do I pay higher interest with a 97.5% home loan that includes capitalised LMI?
Having a loan with a 95% LVR and capitalised lenders mortgage insurance does not necessarily mean your loan is subject to higher interest rates. You can access the same interest rates whether you are borrowing 98% or 80% of the purchase price. There are some very competitive packages that offer up to 0.90% off the standard variable rate, and you might be eligible for these loans, depending on your circumstances.
What about product options and features?
If you obtain a loan with a 95% LVR, and capitalise lenders mortgage insurance, this enables you to take advantage of the same product options and features as other home loans. For example, you can chose a standard or variable rate, and you can add an offset account or a redraw facility to your home loan.
Which property purchases are eligible?
Many different types of properties are eligible for this type of home loan, including established owner occupied homes and duplex homes. The following are the eligible property types:
- Established owner occupied homes.
- Units and townhouses.
- Investment houses.
- House and land packages.
- Vacant land.
- Duplex homes.
Keep in mind that first homebuyers who are eligible for the First Home Owners Grant in Queensland, the Northern Territory, and Victoria can use the grant to fund their deposit for their loan.
Do I need genuine savings for a 95% LVR with capitalised lenders mortgage insurance?
In some cases, you can fund a part of your deposit from non-genuine savings sources, rather than having the entirety of your deposit sourced from genuine savings. Some lenders have relaxed the genuine savings rule, which requires that the funds have been kept in a savings account, term deposit, share portfolio, or other approved means for at least three months without a reduction in value.
Where there is an exemption to the genuine savings rule, you might be able to fund a part or all of your deposit from non-genuine sources. These sources can be a recent cash gift from a family member, a tax refund, proceeds from a vehicle sale, or even a personal loan, in some cases.
At the same time, you might need to meet a few additional criteria when taking out a home loan with a deposit source from non-genuine savings. These can include a steady employment history, a good credit history, and a clear financial and tax return history if you are self-employed.
How do I apply?
If you are in the market for a loan with a 95% LVR and capitalised lenders mortgage insurance, contact ABC Mortgages today for a discussion. We can take you through the entire process, from an assessment of your eligibility, to the loan application preparation. We have excellent connections in the industry, which we can leverage to help you fulfil your dream of home ownership.