www.MySnapCredit.com

www.MySnapCredit.com No deposit home loans are almost a thing of the past, however you can still borrow at a high LVR! A lot of us, especially First Home Buyers won't have a choice when it comes to borrowing at a high LVR (Lending Value Ratio)...

www.MySnapCredit.com
It can either be take it or leave it!
Saving up a sufficient deposit these days can often take years to do, so for those struggling to get a significant deposit together it is either borrow at a high LVR or don't purchase at all...
There are still true No Deposit products in the marketplace, and a good example is a family pledge loan where you can borrow often up to 105% of the purchase price!
The bank simply take s a limited guarantee against the parents property. The interest rates are the same. The huge benefit is having no deposit and the need for mortgage insurance is avoided also.
Property is a vehicle to wealth creation, and sure there is Lenders Mortgage Insurance (LMI) to pay at a high LVR but the opportunity cost is missing out on opportunities in the property market...
If you purchase well, then in 5, 10, 15 years time the capital growth should far outweigh the additional cost of LMI...
and, you will have hopefully built up some equity in your property...then again, on the other hand there will be those that are still renting and saving up for a higher deposit! Time passes us by quickly...
For those who already do have at least 20% deposit then there is another choice...
whether to use the full 20% as deposit or borrow at a higher LVR and use some of the funds/savings elsewhere...

www.MySnapCredit.com
It very much comes down to personal preference and the person you should really consult is your accountant as nobody knows your full financial situation better...
Using the full 20% of your deposit will avoid having to pay Lenders Mortgage Insurance (An expense that is charged when you borrow over 80% of the property value - some lenders will go up to 85% but conditions usually apply)...
But...
This means you may have used all your savings for your deposit...and have nothing left over...
Some people will prefer to use the Bank's money to pay for their purchase, incur the LMI fee but have their own funds left over to invest in other areas...
This is especially the case for property investors where it's more tax effective to borrow a high LVR against your security (if this is your investment strategy)...
So it comes down to: Using your own funds vs Using the Bank's funds
Again, it is each to their own...personal preference...investment strategy etc..
For owner occupied borrowers the following applies to borrowing at a high LVR:
Pros:
-get into property market sooner
-can borrow 95% and add LMI onto the loan to 97%
-only need to save 5% deposit
-using less of your own funds upfront means you can use other funds elsewhere
Cons:
-LMI fee can be quite high depending on loan amount
-borrowing high LVR means less initial equity in your property
-if property prices were to decrease then you have negative equity (ie. borrowing is greater than property value)
Personally, I like the idea of using other people's money as long as I have a good strategy in place and a realistic 'end goal.'