Compare 95% LVR home loans
If you can only afford a small deposit of 5% on a property, it may be harder to get a mortgage with such a high loan to value ratio (LVR). Fortunately, several lenders offer home loans where you can borrow up to 95% percent of the property value. Compare interest rates for low-deposit home loans, as well as their features, benefits, fees and other costs, such as Lender’s Mortgage Insurance (LMI).
Find and compare 95% LVR home loans
Fixed - 3 years
Borrow up to 95%
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Bundle your home loan and credit card with the advantage package and enjoy discounts on selected rates, fees and insurance.
Fixed - 2 years
Borrow up to 94.9999%
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Fixed - 5 years
Borrow up to 95%
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Fixed - 5 years
Borrow up to 95%
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When you decide to enter the Australian property market and take out a home loan, it’s important to understand all the ins and outs of mortgages. It’s highly likely that you won’t have enough money to buy a property outright, especially as a first home buyer, so you will probably need to take out a home loan.
However, the type of home loan you choose, the deposit you can put down and the most attractive offer you can find depends on your financial standing and a number of other factors. Before you enquire with a lender or broker, it’s advisable to conduct some research so you know what your options are.
Have a look at our guide to 95 per cent LVR home loans to get your head wrapped around them before you take the plunge.
What is a 95% LVR home loan?
A 95 per cent LVR home loan is a type of low-deposit home loan for which you are only required to have 5 per cent of the total purchase price to put towards a deposit.
‘LVR’ is an acronym for 'loan-to-value ratio' or 'loan to valuation ratio', which refers to the loan amount you are borrowing, represented as a percentage of the property's value being used as security for the loan. When a lender looks at how much you want to borrow in your loan application, they will compare their own valuation of the property to how much of a deposit you can put down. That’s why a 95 per cent LVR home loan only requires a 5 per cent down payment.
Many standard home loans in Australia require a 20 per cent deposit, but there are other types of home loans available for owner occupiers and investors. They include 70 per cent LVR home loans, 90 per cent LVR home loans and 95 per cent LVR home loans.
What are the benefits of 95% LVR home loans?
Some of the potential advantages for borrowers taking out a 95 per cent LVR home loan include:
- Entering the property market quickly: Because you only need a 5 per cent deposit, you can take out a loan and buy a home faster than waiting to save up the standard 20 per cent deposit of genuine savings.
- Easing short-term financial pressures: If you want to a buy a home but saving a lump sum for a deposit isn’t feasible in the short term, a 95 per cent LVR home loan could temporarily relieve some of the financial burden.
- Taking advantage of low interest rates: You could be able to enter the property market when favourable interest rates are available even if you don’t have enough for a standard deposit.
Features of 95% LVR home loans
Home loans with a 95 per cent LVR typically have similar features to other types of home loans, but the associated rates and fees may differ. For example, a lender might choose to offer a more favourable interest rate to customers who can put down a larger deposit.
Aside from the interest rate and deposit amount, though, here are some of the other common features to consider:
- Fixed rate or variable rate home loan: You can usually decide whether to lock in an interest rate for a set period or have a variable interest rate. Remember to also check the comparison rate, which indicates the loan's overall cost, including interest and standard fees and charges.
- Repayment options: Some lenders will allow you to make additional repayments above the minimum, so you can pay off your loan faster and avoid interest.
- Redraw facility: Some home loans come with the option to redraw additional repayments you’ve made if you need the money down the track.
- Offset account: You may be able to have a bank account linked to your home loan, known as an ‘offset account’. Your lender attributes your account balance towards your loan so you only have to pay interest on the difference.
- Loan term: Usually, the term for a home loan is 25-30 years.
Remember that even if you don't get all the features and benefits you want with your first home loan, you may have the option to refinance in the future. Once you've had a chance to build up some equity in the property and lower your LVR, you may be able to choose from home loans offering a lower interest rate and/or more useful features and benefits.
Consider speaking with a financial adviser to discuss your financial situation before sitting down with a lender or mortgage broker to find the right home loan for you. You can also use RateCity’s home loan comparison tool to see loan products currently available in the market and their lending criteria.
Property Personal Finance Writer
A property and personal finance writer, Nick Bendel covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
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Frequently asked questions
What are the pros and cons of no-deposit home loans?
It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.
The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.
But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.
What is a low-deposit home loan?
A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.
For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.
As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.
What is a loan-to-value ratio (LVR)?
A loan-to-value ratio (otherwise known as a Loan to Valuation Ratio or LVR), is a calculation lenders make to work out the value of your loan versus the value of your property, expressed as a percentage. Lenders use this calculation to help assess your suitability for a home loan, and whether you need to pay lender’s mortgage insurance (LMI). As a general rule, most banks will require you to pay LMI if your loan-to-value ratio is 80 per cent or more. LVR is worked out by dividing the loan amount by the value of the property. If you are looking for a quick ball-park estimate of LVR, the size of your deposit is a good indicator as it is directly proportionate to your LVR. For instance, a loan with an LVR of 80 per cent requires a deposit of 20 per cent, while a 90 per cent LVR requires 10 per cent down payment.
LOAN AMOUNT / PROPERTY VALUE = LVR%
While this all sounds simple enough, it is worth doing a more accurate calculation of LVR before you commit to buying a place as there are some traps to be aware of. Firstly, the ‘loan amount’ is the price you paid for the property plus additional costs such as stamp duty and legal fees, minus your deposit amount. Secondly, the ‘property value’ is determined by your lender’s valuation of the property, not the price you paid for it, and sometimes these can differ so where possible, try and get your bank to evaluate the property before you put in an offer.
Does Australia have no-deposit home loans?
Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.
However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.
Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.
How much deposit will I need to buy a house?
A deposit of 20 per cent or more is ideal as it’s typically the amount a lender sees as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from, with some likely to offer up a lower interest rate as a reward. Additionally, a deposit of over 20 per cent usually eliminates the need for lender’s mortgage insurance (LMI) which can add thousands to the cost of buying your home.
While you can get a loan with as little as 5 per cent deposit, it’s definitely not the most advisable way to enter the home loan market. Banks view people with low deposits as ‘high risk’ and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in LMI as it works on a sliding scale dependent on your deposit size.
Who has the best home loan?
Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.
To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you.
Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.
Remaining loan term
The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.
Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.
How can I get ANZ home loan pre-approval?
Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget.
At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.
An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.
You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).
How much can I borrow with a guaranteed home loan?
Some lenders will allow you to borrow 100 per cent of the value of the property with a guaranteed home loan. For that to happen, the lender would have to feel confident in your ability to pay off the mortgage and in the security provided by your guarantor.
What is a credit limit?
The maximum amount that can be borrowed from a lender, as per the home loan contract.
How do I take out a low-deposit home loan?
If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.
Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.
How can I get a home loan with bad credit?
If you want to get a home loan with bad credit, you need to convince a lender that your problems are behind you and that you will, indeed, be able to repay a mortgage.
One step you might want to take is to visit a mortgage broker who specialises in bad credit home loans (also known as ‘non-conforming home loans’ or ‘sub-prime home loans’). An experienced broker will know which lenders to approach, and how to plead your case with each of them.
Two points to bear in mind are:
- Many home loan lenders don’t provide bad credit mortgages
- Each lender has its own policies, and therefore favours different things
If you’d prefer to directly approach the lender yourself, you’re more likely to find success with smaller non-bank lenders that specialise in bad credit home loans (as opposed to bigger banks that prefer ‘vanilla’ mortgages). That’s because these smaller lenders are more likely to treat you as a unique individual rather than judge you according to a one-size-fits-all policy.
Lenders try to minimise their risk, so if you want to get a home loan with bad credit, you need to do everything you can to convince lenders that you’re safer than your credit history might suggest. If possible, provide paperwork that shows:
- You have a secure job
- You have a steady income
- You’ve been reducing your debts
- You’ve been increasing your savings
What happens to my home loan when interest rates rise?
If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.
When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.
There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.
How do I refinance my home loan?
Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.
Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.
What is a fixed home loan?
A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.
Select a number of years to see how much money you can save with different home loans over time.
e.g. To see how much you could save in two years by switching mortgages, set the slider to 2.
The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.
How personalised is my rating?
Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating.
We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time.