Understanding Low Deposit Premium
A mortgage is a 30-year commitment. The repayments remain a significant amount. That’s why home loan lenders put applications through a thorough financial background check. Conventional mortgages require full financial documentation, a long credit history, and a 20% deposit.
Mortgage lenders in Australia acknowledge that it’s more difficult for first-time homebuyers to accumulate $100,000 for a deposit. Thus, they’re willing to create innovative loan products.
A homebuyer who requests a higher loan-to-value ratio poses more risk. Therefore, lenders find a way to mitigate it. To mitigate the risk, lenders employ a low deposit premium. The total mortgage amount determines the fee.
Lenders continue finding ways to help home buyers become homeowners. Most individuals pay for a place to stay. When you rent, you don’t come away with anything at the end of the lease. As a homeowner, every repayment helps you build equity in the property.
The low deposit premium is different from the lender’s mortgage insurance. Homebuyers will incur one or the other, not both.
Mortgage House remains an innovator in the lending market. We work with home buyers who can only place a low deposit, provide low financial documentation, or have a credit history with some blemishes in the Australian housing market.
Low Deposit Premium Conclusion
Homebuyers who cannot place a 20% deposit toward their purchase incur the low deposit premium. The amount is based on the total value lent. For more information about the fee, contact our Mortgage House loan specialists.