95% LVR capitalise Stamp Duty
How Can a Loan With a 95% LVR and Capitalised Stamp Duty Help Me?
Have you saved up a 5% deposit, but you lack the additional funds needed on top of that to cover purchasing costs, such as stamp duty and legal fees? A 95% LVR loan with capitalised stamp duty is one of the options that you might want to consider.
What are the benefits of this loan?
A loan with a 95% LVR and capitalised stamp duty enables you to effectively borrow the cost of the stamp duty, which in some states can be nearly as much as the minimum deposit, as part of the home loan. This means you get access to more funds to cover the extra costs, without having to wait until you can save up.
Am I eligible to apply for a loan with 95% LVR and capitalised stamp duty?
As with any type of loan, you need to fulfil the basic requirements to be approved. These can include the following.
- You need to have an excellent credit history with no major defaults. If you have any defaults in the past, they need to have been paid off in full prior to your application.
- You should have a strong employment history, and currently have steady employment. This means at least one year in your current job, or at least two years in your current line of work. If you are self-employed, you might need to have paperwork demonstrating your financials and taxes for the past several years or more.
- You will generally need to have the full 5% deposit saved as genuine savings. So you need to have 5% of the purchase price of the nominated property in a savings account (or other approved format) for at least the past three months without any reduction in value.
How does it work?
The 95% LVR with capitalised stamp duty is basically a 95% home loan, with a $20,000 credit card. Your genuine savings deposit covers the 5%, while the remaining purchase costs are placed on the credit card. The credit card will typically come with the same interest rate as your home loan, and you need to make minimum repayments on the card each month as you do with the actual home loan itself.
What are my other options?
If you are looking for an alternative to the 95% LVR loan with capitalised stamp duty, you might be able to secure a loan that covers 97%, 98% or 100% of your mortgage to help you cover the associated purchase costs. In this situation, you will need 5% deposit in genuine savings, but you would finance costs such as stamp duty and conveyancing fees through a slightly larger loan amount.
This means you can focus on paying off just the home loan each month, without the additional repayments for a credit card.
Another alternative is to have an immediate family member, such as a parent or sibling, guarantee a 100% loan with extra funds to cover your purchase costs, and no deposit. You and your guarantor will need to meet the eligibility criteria. Alternatively, you might opt for a non-genuine savings loan, whereby you can finance a large deposit from non-genuine savings sources, such a tax return, gift, or sale of asset.
How do I apply for a loan with a 95% LVR and capitalised stamp duty?
If you are interested in this type of home loan, the first thing you will need to do is determine your eligibility. Contact ABC Mortgages to discuss your situation, and get help finding and applying for the right home loan for your circumstances.