Beware of 95% of Property Value Loan Offers
Jack and Mary, both employed as full-time emergency services personnel, carefully saved $35,000 for a deposit to buy an investment property to assure their long-term future. After seeing local banks advertising the availability of loans for up to 95% of the value of any purchased property, Jack and Mary set themselves a property purchase budget of $700,000.00 and started attending open for inspections. After visiting a few open homes, they found a property they liked signed a Contract of Sale for $700,000 and approached their local bank for a 95% loan. They were very confident that with their stable employment history and good salaries, any bank would lend them the $665,000 they needed to settle their purchase. Several local banks advertised loans of up to 95% of the property value, and as Jack and Mary had 5% deposit and enough extra cash to cover Stamp duty and all mortgage registration costs, they applied to their local bank of choice for a 95% loan.
After assessment, the bank’s verdict was that to settle the purchase of the property, even with borrowing 95% of the property value, they would have to come up with an extra $28,000, to effect full settlement of their purchase. Disappointed, and not having an extra $28,000 available to them, they went to another bank located nearby. The news there was somewhat less of a shock, but they were told that they would still require an extra $17,000 after borrowing the same 95% of property value, to fund the full amount required to settle their purchase. Starting to get very concerned that they may not be able to settle their new purchase and be at risk of losing the deposit they had paid, and possibly incurring other costs, Jack and Mary spoke to family members, one of whom referred them to Oz Lend. Oz Lend, through our intimate knowledge of a wide range of lenders, our solid understanding of their differing lending criteria, and our sound experience in dealing with the nuances associated with Mortgage Insurance (which is required to be taken out by all borrowers by the lending institutions who offer the high loan to value ratio loans), found a lender who provided the full 95% as requested and was also prepared to include within the loan, an additional amount to cover the full cost of the required mortgage insurance. We arranged a loan $696,000 – 95% of property value plus the full amount of the required Mortgage Insurance premium that enabled Jack and Mary to fully settle the purchase of their investment property, without the need for them to find additional funds elsewhere. Jack and Mary were very happy to have been referred to Oz Lend.