Compare 85% lvr home loans

Most mortgage lenders prefer that you pay an upfront deposit of at least 20 per cent of a property’s value when you apply for a home loan. However, by the time you’ve saved up this deposit, your dream house may have been sold to someone else, or its price may have increased.

Depending on your personal financial situation, a home loan with a Loan to Value Ratio (LVR) of 85 per cent could be an effective compromise, as you’ll only need to save a deposit of 15 per cent. A few lenders may even choose to waive the LMI charge in order to secure your business, though other terms and conditions may apply.  

Generally, the more money you can pay as a deposit on a property, the better the home loan deals that may be available to you. Some of the lowest interest rates and the most flexible home loan features may only be available to borrowers with an LVR of 80 per cent or less.

Because a 15 per cent deposit is relatively close to the 20 per cent benchmark to avoid LMI, some lenders may be willing to negotiate with selected borrowers who can demonstrate financial security in other areas. You may be able to pay a little less up front, and enjoy a lower interest rate than you would with an LVR of 90 per cent or 95 per cent, or more flexible home loan features.

Additionally, some mortgage lenders may offer to waive the cost of LMI on an 85 per cent LVR mortgage as an incentive to attract your business. Saving a smaller deposit then paying no LMI can make a big difference to your financial situation, and may allow a borrower to make a purchase where they otherwise could not.

Of course, these offers may not be available to everybody, or suited to every borrower. You may need to be a first home buyer, or fulfil other terms and conditions to qualify for an 85 per cent LVR home loan deal with no LMI. A mortgage broker may be able to look at your personal finances and determine which offers may be right for your and your needs.

While a difference of 5 per cent may not sound like much, it can make a big impact on the time and effort it takes to save your deposit.

For example, imagine purchasing a hypothetical property for $500,000. Here’s how long it may take to save up different deposits (assuming you’re saving $1000 per month in a savings account with a 2 per cent interest rate), and how much you may have to pay in LMI: 

Keep in mind that some lenders may offer to waive the cost of LMI for an 85 per cent LVR home loan, reducing some of your upfront costs. Also, remember that the higher your LVR, the higher the interest rates you may need to pay on your home loan.