Buying a property with less than 20% deposit is possible. Lenders will lend you up to 95% of the value of the property, this means that you need as little as 5% deposit. These loans are known as low deposit home loans.
Low desposit home loans usually carry higher interest rates and might be harder to get. Additionally these loans are more expensive because you will need to pay the cost of Lenders Mortgage Insurance, this insurance protects the lender in the event that you default on your home loan.
As a general rule, the more you need to borrow, the higher the interest rates and the higher the cost of Lenders Mortgage Insurance, also your choice of lenders will be more restricted.
Low Doc loans or loans self-employed borrowers have a lower threshold.
You will need to start paying Lenders Mortgage Insurance when you borrow more than 60% of the property value.
Furthermore most lenders won’t lend you more than 80% of the purchase price if you are self-employed. There are a few lenders that might approve a loan for more than 80% of your purchase price but you must expect higher interest rates and higher lenders mortgage insurance rates. If this is your case we have calculated your insurance premium using the 80% loan-to-value-ratio rate for your loan bracket. Please consider that the rates may be higher.
On Own My Own Home we’ve calculated your Lenders Mortgage Insurance based on your employment status, the property value and the amount you expect to borrow from your bank. Please be aware that the rates used in the calculation are only sample rates and these may vary from lender to lender, and they may also change in the future. We will keep monitoring and updating the rates offered, and alert you through the app when there are changes that directly affect your total purchase cost. Our goal is to keep you on track with your property purchase plan.
For more information on lenders mortgage insurance click here.
This page was last updated on 19 September 2019.