Lenders will now finance up to 95% or even 100% of a prop-erty's value. Therefore, if your contribution to the purchase price is less than 20%, it is likely you will have to pay a Low Equity Fee as part of the cost of financing the purchase.
Backgound Information:
The Lender is taking a significant risk on the financing of the house and the security available is not sufficient for the stan-dard risk assessment process.
The Lender will seek either a greater return for their in-creased risk or they may re-insure their risk with a Mortgage Insurer. The Insurance cover received is Lenders mortgage insurance and has absolutely no benefit to the borrower.
When the Lender re-insures their risk, the Mortgage Insurer then has the power to decline a loan application.
Until around 1988, it was not possible to borrow more
than 80 % of a property’s value. It was only through the availability of Mortgage Insurance that Lenders were able to offer greater flexibility to 1st Home Buyers.
A Lender will generally require additional information in relation to your savings history and your current employ-ment. There may also be some restrictions on the type of property being purchased.
The best way to answer all these questions and achieve
a number of other goals is to obtain a Pre-Approval.
