95% LVR for FHB

[tvadera]

Hi All,

My friend a FHB is looking for a new townhouse and recently visited a branch and the banker told him that he can borrow:

95% of the purchase price + SD + LMI

Is this true?

I think FHB can borrow only 95% of the purchase price and remaining costs need to be paid by the buyer

E.g.
Purchase price: 500K (new development, just constructed)
SD: I am not sure how its calculated, because its brand new, so it would be on the land comp only (lets say its 10K)
LMI: not sure how its calculated (lets say its 8K)
Government grant: not sure if it still exists in VIC

So can the buyer borrow
475K (95% of purchase price) + 10K (SD) + 8K (LMI) = 493K

I thought FHB can only borrow upto 95% of the purchase price and any additional costs like SD, LMI , they would have to pay from their pocket.

Regards,
TV

 

[Aaron_C]

For some lenders like St George/Bank of Melbourne etc the LMI can be added to the loan amount. As for stamp duty - this is not provided by lenders but what the bank manager may have been saying is that effectively the borrower is not paying stamp duty because the FHOG will outweigh any stamp duty payable.

 

[tvadera]

Hi Aaron,

Yes LMI can be added to the loan amount but then can the borrowings exceed 95%?

In the eg I have given my understanding is borrower can only borrow 475K max for prop purchase price of 500K

and that 475K can consist of LMI comp. Is this correct?

 

[Aaron_C]

No LMI can be added to a 97% LVR in this case.

 

[tvadera]

Good to the know that Aaron that FHB can borrow upto 97% (incl of LMI) of the purchase price.

Do all major banks support this ?

Also what are the chances of application getting approved by the LMI provider (i.e Genworth or QBE)

Regards,

 

[Jamie M]

Some lenders will cap LMI above 97%

No lender is going to provide 95% + LMI + SD unless there's another security in the mix.

Cheers

Jamie

 

[Aaron_C]

Approval of a 95%+LMI cap deal depends on how strong the client's cashflow is, the security and the credit scoring of the application.

 

[Jamie M]

Also what are the chances of application getting approved by the LMI provider (i.e Genworth or QBE)

Regards,

An existing relationship with a lender (via a personal loan and/or credit card) can help with credit scoring (providing there's been good conduct with the account).

There are a heap of other factors to consider as well so it's too difficult to provide an indication as to whether the app will get the green light.

Cheers

Jamie

 

[tvadera]

Thanks guys for the input, learnt something new today

Regards,
TV

 

[Rolf Latham]

Hi All,

My friend a FHB is looking for a new townhouse and recently visited a branch and the banker told him that he can borrow:

95% of the purchase price + SD + LMI

Is this true?

Get the SD in writing

quick..................

but then I suspect anyone that clueless giving credit advice would have minimal idea of what would actually get through with that lender, OR more to the point how to structure it so it has the best chance

ta
rolf