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Guest gold vision financial

Whilst updating things here I thought I would update the requirements for a Home Loan as this has not been done in a while.

 

1. Maximum lend - Visa restrictions.

 

if you are a permanent resident (PR) you can borrow normally up to 95% plus Loan mortgage Insurance (LMI) costs which normal push this to about 97% of the Loan Value Ratio (LVR) - which is the % that the Loan is against the value of the home. ie a $500 K loan for a home Value of $ 750 K is a LVR of 66%. (500 divided by 750 = .66 x 100 = 66%)

 

if you are a non resident (NR) most lenders will do up to 80 % LVR with one lender doing up to 90% LVR.

 

2. Deposit Required

 

The amount of LVR determines the savings required. As a PR you need a minimum of 5%. As a NR it is anywhere between 10 and 20 %.

 

3. Additional Savings

 

In short you also need extra funds for settlement and bank fees, stamp duties or land duties and the cost of Loan Mortgage Insurance (LMI) if applicable.

 

Whether you are required to pay these fees or some of them depends on whether or not you are entitle to the First Home Owners Grant (FHOG) scheme or not and whether or not your loan requires LMI.

 

4. First Home Owners Grant and other Subsidies.

 

Each state offers different schemes and entitlements. If you have never owner a home in Australia before and you are a permanent resident then

you are entitled to some grants or discounts or exemptions. Most states also have a home value cut off as well. These are constantly changing and it is best to refer to the state treasury site for each state.

 

In WA currently there is no duty applicable for home purchases up to $ 550 K. An extra FHOG of $ 3 K is provided when you purchase an existing home or $ 10 K for a new building.

 

5. Loan Mortgage Insurance

 

LMI is payable by you as an extra fee to protect the banks (not you) against a loss should they have to foreclose on your loan and they make a loss from the sale of the property. Banks will in most cases will not provide a loan without it once your loan reaches a certain LVR. Most banks will capitalise the LMI fees into the loan.

 

LMI is payable on normal loans where the LVR is above 80%. For Low documentation loans it is where the LVR is above 60%.

 

 

6. Employment

 

Quite simply - the longer you are employed the easier it is to qualify or meet the lenders employment/income conditions. Where you have moved to Australia and continued with the same employer in the same occupation then you can qualify for a Loan straight away.

 

However, where there has been a change of employer or occupation, then up to 1 year or more of employment may be required.

 

If you are self employed running a business then 2 years of financial statements are normally required but in some cases we can get this down to one year.

 

There are so many variables it is hard to give a hard and fast rule as there are lenders who have discretion to bend the rules or do not use LMI.

 

7. Over all position.

 

Since most members of this site will have recently or are still in the process of emigrating to Australia then it is best to discuss your requirements and what is needed to qualify for a loan well in advance before even looking for a home. Failure to do so will often lead to disappointment when you realise your loan is declined because you did not meet a basic requirement.

 

A Finance or Mortgage Broker (Credit Adviser) normally can find the most appropriate loan for you with the best structure and interest rates for you. There is normally no cost for using a Broker as they are paid by the lender for placing your business with them.

 

i hope the above helps

 

John Horvath

Director/Financial Adviser/Credit Adviser

Edited by gold vision financial
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  • 2 months later...
Guest gold vision financial
Hi very interesting reading. Does this mean if we were to apply for a 50% LTV on a property of approx 700,000$AUD we would have to pay duty but not LMI?

 

 

Loan Mortgage Insurance is payable on different Loans at different rates. In some case lenders will not require a Loan Mortgage Insurer (LMI) to be involved but still require you to pay a Risk Fee - which means a fee payable directly with the lender for providing a loan for you.

 

Guidance on this is as follows:

 

Full Documentation Loan - Employed or Self Employed where you can provide all the documents to support your application - LMI starts at 80% of Loan Value Fee. Ie if home is valued at $ 100,000 then any borrowings above $ 80,001 will require LMI.

 

Low Documentation Loan - Normally for Self Employed where they can not provide all the documents to support the application - especially where it relates to proving income. In such cases BAS statements and or Accountant verification is required to meet income requirements. For Low Documentation Loans LMI is payable on loans from 60 % to 80% LVR. ie if home value is $ 100,000 then any borrowings on a Low Documentation basis above $ 60,001 will require LMI.

 

Therefore - the answer to your question is that a 50% borrowing of $ 700,000 would not require either LMI to be involved or the payment of a equivalent Risk Fee.

 

Stamp Duty is payable on most property purchase depending on which state you purchase in. If you are a First Home Owner you may be entitled to either discounts and/or state grants but normally you must be a permanent resident to qualify. Check with state treasury as to your entitlements.

 

I hope that helps

 

cheers

 

John Horvath

 

Financial Adviser/Finance Broker

Edited by gold vision financial
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