LOAN TO VALUE RATIO (LVR)

Your LVR is what a lender uses to determine how much they can lend you, contrasted against the price of the home that you want to buy.

The loan to value ratio is the size of the home loan as a percentage of the property’s value. If you borrow $400,000 to fund a property worth $500,000, then your LVR is 80%, because $400,000 is 80% of $500,000.

Under some conditions you can have an LVR of up to 90 even 95%. But you will have to pay an additional fee called Lenders Mortgage Insurance or LMI in some circumstance this can be added to the loan.

LENDERS MORTGAGE INSURANCE (LMI)

Lenders mortgage insurance will pay out the lender if you default and chase you for the money so beware! .  Don’t make the mistake of thinking this will replace your standard insurances such as income protection, life insurance and even land lord insurance should be considered.  Your Jim’s Mortgage Professional can assess if you need to speak to a Jim’s Financial Adviser if not fully covered.  LMI is always payable when you do not have the usual 20% deposit . However, did you know that some lenders will pay for this is you if you are a “professional” such as a Doctor or a Lawyer – ask us if you qualify?

When you need to apply for Lenders Mortgage Insurance the servicing criteria is a lot stricter so guidance on the best way forward is imperative.

EXTRA COSTS TO CONSIDER

The cost of the house is not the only thing you’ll have to save for. Stamp duty, insurance, moving costs and legal fees all need to be taken into account when you are saving. Your Jim’s Home Loan Professional will give you a comprehensive rundown of every expense that you’ll need to prepare for.