So I'm currently in the market looking to purchase a house.
I have spoken to a mortgage broker recently who gave me an idea of how much I can borrow.
The broker had mentioned that some banks do approve a loan with only 15% deposit without incurring LMI.
With the current market, to have 20% is a really difficult task (letalone the stamp duty).
I'm aware that if you do take this option, it will attract higher interest rates.
What I'm just wondering if anyone has taken that route and if there's anyone who can enlighten me on the negative points and its associated risks.
Thanks!
15% Deposit or 20% Deposit for a House Purchase
donedeed on 22/04/2015 - 23:12
Comments
I believe OP mentioned no LMI ("some banks do approve a loan with only 15% deposit without incurring LMI"). So may be higher interest rate instead of LMI?
Can you clarify whether you paid LMI or not?
Ahh yes I see now. I paid LMI with a normal loan product (same rates offered etc).
how much are you borrowing?
Can you take the grant into account? (Assuming you're a first home buyer )
you also assuming they're buying a brand new home?
Yes, I'm eligible for it as it will be my first home purchase.
But that being said, I'm not limiting my options to only new houses.
broker here.
15% deposit no LMI is possible (Citibank is one of them). However bank will be very strict on what they take as security
Realistically you need 25% of the value of the house for the purchase if you want to borrow only 80%. 5% is the cost including stamp duty, lawyer fee, reports etc…
Thank you.
That really limits my options now then.. :/
Make your own check whether or not you will pay the LMI. LMI may be hidden in some way (higher fees, higher rate or ??) Lots of deceptive people out there and since this may be the biggest purchase you ever make, take the time to check everything!!
agree. its very common info you need 20% or take LMI. if someone now saying 15% no LMI, make sure read and compare their "term and conditions". keep asking, any catch?
some brokers dont care what percentage u have. for them, the more u borrow the better… (as long as they have confidence u can afford to pay the repayments)
Keep LVR to around the 88% and you'll be sweet, LMI really skyrocket from 88.01% LVR onwards.
I paid it and no LMI doesn't affect interest rates.
Depends on what size mortgage you can afford. Significant up front equity is great but not always possible for many reasons. Do the sums, if you can afford the repayments comfortably and are disciplined enough then personally I wouldn't let LMI get in the way of one of the most significant investments of your life.