First home buyers received the news last week that several lenders are now willing to lend up to 95 per cent of a property’s purchase price – but getting such loans approved is not going to be easy.
Several lenders, including Adelaide Bank and Homeloans Ltd, introduced 95 per cent LVRs (loan-to-valuation ratios) early last week. One lender even launched a 99 per cent LVR product.
High LVR loans make sense for first home buyers – particularly those that have the capacity to service a mortgage but lack the ability to save the 20 per cent deposit typically required by lenders.
But while the return of higher LVRs is indeed good news for cash strapped borrowers, first time buyers have to be aware that getting approved for these loans will be no easy feat.
The more conservative approach to lending that banks and non-banks have adopted following the global financial crisis looks set to stay. This means that borrowers will need to present a solid case to get lenders to cover what is essentially the bulk of the property price.
To qualify for a 95 per cent home loan borrowers will need to demonstrate a strong savings history. Lenders will also be looking at factors such as employment stability and of course credit history. While these same assessments apply to all mortgages, borrowers seeking a 95 per cent lend will be under increased scrutiny.
Lisa Montgomery, CEO of Resi Mortgage, says first time buyers should think of applying for a home loan like applying for a job.
In her column in the September issue of First Property Buyer, hitting shelves later this week, she offers her strategies for how you can best present yourself to a lender to better help your chance of securing a mortgage.
She actually draws parallels between how you would prepare for a job interview and how you should package up your application for a mortgage.
“When you turn up for your job interview you’re prepared, put your best foot forward, look smart and position yourself as a serious contender. You do all you can to give yourself the best chance at long term success.
“The same approach needs to be applied to securing your home loan,” she says.
Keep your eye out for September issue for more insights from Lisa. There are also some good threads on our first home buyer forum which you can participate in. Click here.