Online lender 86,400 introduced a new loan-to-value ratio (LVR) level of 85% for homeowners making principal and interest payments (P&I) and waived Lender Mortgage Insurance (LMI) ).
For loans at this new level, home buyers can borrow with a deposit as low as 15%.
Typically, borrowers have to pay LMI if they have a down payment of less than 20%, which can add thousands of dollars to the initial costs of buying a property. The cost of LMI usually depends on factors such as the loan amount, the type of mortgage loan, and the amount of the deposit.
The new 85% tier will be available under these 86,400 products:
- Own variable rate mortgage
- Own fixed-rate mortgage (terms 1, 2, 3 and 5 years)
- Neat variable rate mortgage,
The interest rate for 85% LVR loans starts at 2.04% (comparison rate of 2.96% pa) for a one-year fixed rate under the “Clean” home loan and at 2.54 % pa (compare rate of 2.55% pa) for the ‘Neat’ home loan.
Travis Tyler, director of products and marketing at 86,400, said the move would reduce the potential cost of a property to thousands of dollars.
“We know how difficult it can be to break into the housing market and get a loan, so we‘We help homebuyers speed up their financing with smaller deposits or equity and very competitive rates, ”Tyler said.
The neobank also announced a cashback of $ 2,000 for borrowers of 85% LVR loans, which will be available for purchases and refinances on loans of at least $ 250,000, submitted before September 30, 2021 and settled before. November 30, 2021.
How much can borrowers save under the new LVR 85% level of 86,400?
The deposit requirement below 86,400‘The new loans mean borrowers in Sydney will only need a deposit of $ 152,654 for a mid-priced property, significantly lower than the deposit of $ 203,538 for an LVR of 20%.
This also translates into an LMI savings of approximately $ 10,900.
For buyers in Darwin, which has the lowest median price, borrowers will only need a down payment of $ 72,908 to purchase their home.
The higher LVR requirement prevents borrowers from committing LMI $ 4,500 for a mid-priced property in Darwin.
Lower fixed and variable rates
The lender has also lowered a number of its fixed and variable interest rates.
The three-year fixed rate for “Propre” Housing Credit is now 1.85% pa (comparison rate 2.55% pa). This applies to owner-occupiers who pay principal and interest with an LVR or 20%.
The variable rate for the ‘Neat’ Housing Loan has also been lowered to 2.09% per year (comparison rate of 2.10% per year). This applies to LVRs of 60% and less.