Security is not a prime lending justification but is a risk mitigant as well as supporting the loan facility.
Lenders do not lend with the aim of having to acquire and
then sell a security.
Lenders use various LVR’s against acceptable securities and
lending margins are often 80% for acceptable residential security.
Typically, borrowers can borrow in excess of 80% LVR by
taking out LMI (Lenders Mortgage Insurance).
Different lenders have different options when it comes to
LMI and some will set a higher interest rate if the lender funds the LMI for
Lo-Doc lenders will often set their LVR at 60%, for
LMI will be required
typically for loans in excess of 60% LVR and non-conforming lenders may not require
LMI, or they may build the LMI cost into the interest rate or sometimes into
the loan application fee.
Applicants whose total assets are not greater than their
total liabilities and applicants who are not yet 18 are not considered.
Standard Security can include:
· Vacant residential land
· House and land packages (construction)
· Display homes
· Residential homes
· Residential strata units
· Residential strata/freehold townhouses or
· Studio apartments (minimum size 50 sq.m)
· Rural residential housing
· Rural land for the purpose of residential
Non-standard residential security can include:
· Services apartments
· Development land
· Property development
· Commercial property
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Friday, 28 February 2020