Loan To Value Ratio, Mortgage Insurance & Minimum Deposit – are all banks the same?

Answer: NO

Graph showing maximum LVR including mortgage insurance for different lenders.

I had a lovely young couple come to see me that had a deposit of $40,000. They had found their perfect property for $400,000. Unfortunately, they banked with Bank A, so went to see them in the branch.

Excited and nervous, they spoke to their bank manager but were declined as they didn’t lend above a Loan to Value Ratio (LVR) of 90% so were unable to cover the mortgage insurance. Disheartened at the thought of continuing to rent and save they came and saw me.

You can quickly see from the graph below that the minimum deposit each bank requires varies immensely and my young couple could have been approved with the other four lenders immediately, with no need to continue renting and saving.

Graph showing minimum deposit needed on $400,000 property for different lenders.

Sometimes you have to look beyond your current bank/lender, as variance of $32,000 could mean years of saving before you get into your new home. Of course, this would mean additional costs of mortgage insurance and not always the lowest rate so you would need to weigh up the pro's, con's along with your own priorities.

If you're in a similar position or would like to know exactly how much you would need to save for the properties you're looking at please get in touch today!