More Aussies are choosing to borrow with a 10% deposit says APRA, but are they forgetting one important thing?

By Ceyda Erem · Monday, 16 September 2019 · 3 min read

Fact Checked

According to recent figures released by the Australian Prudential Regulation Authority (APRA), there was a 12.6% decline in the number of new home loans approved in the 12 months ending 30 June, 2019.

Getting more specific, the regulatory body recorded an 11.1% decrease in new owner-occupier loans and a 15.8% drop in new investment loans.

The data also revealed that home loans with a high-LVR (loan to value ratio) increased from 20.3% to 21.5% - approximately 68.1% of these loans had an LVR between 80-90%, while 31.8% of loans had an LVR over 90%.

“I’m not surprised by these figures, given how difficult it is to save for a 20% deposit with rising living expenses,” said Mozo Banking Expert, Peter Marshall.

“There’s no denying that borrowing with a deposit of 10% or less can get you into the market sooner, but borrowers still need to be aware of the fact that it does mean they’ll pay Lenders Mortgage Insurance (LMI).”

Lenders Mortgage Insurance is a one-off payment made by a borrower taking out a loan with a deposit smaller than 20%. The amount of LMI a borrower will be charged depends on the size of their loan.

“There’s a common misconception with LMI in terms of the beneficiary - LMI is for the lender, not the borrower. It safeguards the lender in the event that you are unable to make your monthly repayments,” explained Marshall.

“This cost can be many thousands, so you might want to think about adding it to your loan amount, or getting a guarantor to avoid LMI entirely.”

So if you’re an Aussie borrower looking to snap up a property this season, you’re going to need a hot home loan deal. That’s why we’ve gone ahead and rounded up some great home loan offers than allow you to borrow with a 10% deposit.

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Comparison rate warning

WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

How Initial Monthly Repayments figures are estimated

Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

ANZ - Simplicity PLUS

3.72% (3.76% comparison rate*)
Borrow with a 10% deposit
Free extra repayments

Find out more

First up is the ANZ Simplicity PLUS Home Loan, a loan that keeps costs low and perks high. You’ll be able to borrow up to 90% of the property’s value on a low 3.72% (3.76% comparison rate*) and pay no upfront or ongoing fees, though there is a $160 discharge fee. And speaking of paying off your loan early, the ANZ Simplicity PLUS Home Loan features free extra repayments, which could help trim your total interest bill.

Great Southern Bank - Achieve Variable Home Loan

Low 3.18% variable rate (3.23% comparison rate*)
Borrow with a 10% deposit
Partial offset account available

Find out more

But if you prefer to bank with a credit union, then look no further than the CUA Achievable Home Loan. This competitive loan features a low 3.18% variable rate (3.23% comparison rate*) and a maximum LVR of 90%. While borrowers will need to factor in the hefty $600 application and $500 discharge fee, there are no ongoing fees. A partial offset account is also available for balances up to $15,000, plus you’ll have the option to make free extra repayments.

Well Home Loans - Well Balanced

Super low 2.97% variable rate (3.00% comparison rate*)
Multiple 2019 Mozo Experts Choice Award winner^
Borrow with a 10% deposit

Find out more

Last but certainly not least is the Well Balanced Home Loan, offering a super low variable rate of 2.97% (3.00% comparison rate*). The Well Balanced Home Loan is the proud owner of multiple 2019 Mozo Experts Choice Awards, including the title of Best New Home Loan for 2019. Borrowers will be able to split their loan, make extra repayments or redraw these funds with no penalty and they can even attach an offset account to the loan ($10 per month). However, there are a number of fees you will need to budget for, like the $250 application fee, $385 legal fee, $150 settlement fee and a $300 discharge fee.

Want to compare even more loans? Then make your next stop our home loan comparison tool!

^ More information about our 2019 Mozo Experts Choice Awards

^* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

^** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

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