If you’re in the market for an 80% LVR home loan, there are plenty of choices available, which you can compare with Savvy.
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The cost of borrowing money for a home loan is all based on risk; the riskier the loan, the more security is required by the lender or the higher the interest will be on that loan. If you're fortunate enough to have a sufficient deposit, you're more likely to be offered the best loan interest rates around.
If you have an 80% loan-to-value ratio (LVR), you’ll have more options when it comes to selecting your loan, whether you’re a first home buyer, a property investor, a refinancer or anyone in between. Savvy can help you compare 80% LVR home loans side-by-side so you can see which one may be right for you. You can also compare them with the maximum LVR home loans available to track your savings, so whatever your loan needs, Savvy can help you find, compare and save!
A loan-to-value ratio (LVR) describes how much a borrower wants to borrow compared to the agreed value of the property he’s looking to buy.
An 80% LVR home loan means you’re looking to borrow 80% of the agreed value of the property you’d like to buy and can provide the remaining 20% of the purchase price as a deposit.
For example, if the property you wish to buy is valued at $500,000, you’d need to provide 20% of that amount (which is $100,000) as a deposit to reach an LVR of 80%.
An 80% LVR home loan is regarded as a standard home loan, as 20% is the lending industry’s standard requirement for a loan to ensure the borrower has access to the widest range of loans and lowest interest rates.
With many hundreds of lenders and loans to choose from, Savvy can help you compare similar loans so you find one that’s just right for you, whether you’re a first homebuyer, refinancer or property investor.
You can save a great deal of money overall by providing a 20% deposit for your loan. Look at the following examples of a property worth $500,000. The loan is taken out over 30 years at an interest rate of 2.5%.
In the first instance, the borrower has a 20% deposit, so the LVR is 80%. Lenders Mortgage Insurance (LMI) is not applicable, and the loan amount is $400,000.
In the second example, the borrower’s LVR is 85%, so LMI applies. The loan amount has risen to $425,000.
The third example is a 90% LVR home loan and so the loan amount has risen again to $450,000.
| Loan to value ratio (LVR) | Deposit % | $ deposit required | Cost of LMI | Total interest paid on loan | Total interest and LMI | Additional cost compared to 80% LVR |
|---|---|---|---|---|---|---|
|
80% |
20% |
$100,00 |
$0 |
$168,932 |
$168,932 |
N/A |
|
85% |
15% |
$75,000 |
$4,887 |
$179,535 |
$184,422 |
$15,490 |
|
90% |
10% |
$50,000 |
$8,820 |
$190,096 |
$198,916 |
$29,984 |
As you can see from the above example, the difference between having a $500,000 loan at 80% LVR (with no Lenders Mortgage Insurance applicable) and high LVR home loans at 90% (when LMI is payable) is $29,984 over the life of the loan.
This example shows how having a loan with an 80% LVR can save you money, and this doesn’t even consider the fact that 80% LVR loans generally attract the lowest interest rates possible.
If you are looking for a higher LVR home loan, say 90% LVR or even 95% LVR, then your home loan options may be more limited.
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The higher your deposit, the lower your loan amount will be, and so the less interest you’ll pay on your loan overall. Whenever you’re thinking of affordably financing a house purchase, it’s always a good idea to take out the smallest loan size possible to reduce the interest payable on your loan, rather than look at high LVR home loans.
As 80% LVR is considered standard by most lenders, you’ll find a wider range of loans available from many different lenders, so you can use Savvy’s loan comparison tables to help narrow down your search and ensure you get your ideal loan.
An 80% LVR will usually mean you’re eligible to apply for loans with the lowest interest rates and fees and the most additional loan features (such as offset accounts, redraw facilities and lump sum payment options). This is because you’ll be considered a low-risk borrower by most lenders.
Low-risk borrowers are naturally preferred by most lenders, so by having an 80% LVR for your loan, and providing the full 20% deposit on the property you wish to buy, you’re maximising your chances of getting loan approval.
LMI is an insurance scheme to protect lenders in high-risk loan situations. The premium is paid by the borrower in return for being approved for a loan with a deposit of less than 20%, such as 90%, 95% and 100% LVR loans.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
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© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
