These home loans offer low costs, coupled with a host of features, giving the best overall value.
7+
Great
These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.
5+
Standard
Usually the home loans would offer above average rates. They may still include some competitive features.
0+
Basic
Higher costs and/or fewer features.
A home loan with a 95% LVR simply means it is available with a 5% deposit. But getting a loan with such a small deposit means your lender will examine your application very carefully and will charge you a lenders mortgage insurance (LMI) premium too.tab
For many borrowers, paying LMI and getting into the market faster is well worth the extra costs.
Compare home loans with 95% LVRs
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What is Finder Score?
The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
How is a 95% mortgage different to other home loans?
Most home loans require a 20% deposit (80% maximum loan-to-value ratio). But some products have a maximum insured loan-to-value ratio of 90 or even 95%. This means you can forget the 20% deposit and buy your property with a smaller deposit.
There are few differences between an 80% mortgage and a 95% mortgage. It could be virtually the same product, even with the same interest rate.
So what's the catch?
There are 2 key differences:
Lenders mortgage insurance. If your deposit is under 20% lenders require you to pay an insurance premium which gives them added protection. Depending on your deposit size and property value, LMI can add thousands of dollars to your mortgage. Use Finder's LMI calculator to estimate your premium.
Stricter lending criteria. A lender will scrutinise your application more closely if your deposit is under 20%. You need to make sure all your mortgage documents and paperwork are in order to maximise your chance of success.
Using the table above you can sort through loans with 95% LVRs and read reviews of the various products and lenders. Look at the fees, flexibility and features the loans come with to get a better idea of which ones work for you.
When you've found a product you're interested in hit the green button and you'll be taken to either a website or a form, where you can leave your details and get in touch with a mortgage expert. They'll guide you through the application process.
It is possible to buy a property without saving a deposit at all, but it isn't easy. Most lenders require at least 5% genuine savings. This is often defined as money that's been sitting in your account for at least 6 months. But there are ways around this:
Parental guarantor. If your parents own a property they can use it as security to guarantee your mortgage. You have the option of saving 5% yourself and getting your parents to guarantee the other 15% of the deposit. This way you can avoid LMI. But some lenders will allow your guarantor to cover the full 20% of the deposit.
First home owners grant (FHOG). If you're eligible for a first home owners grant this can form part of your deposit, making it even easier to get to 5%.
Selling shares or other assets. You can sell off an investment and use the cash as a deposit but you may need to satisfy the genuine savings rule.
Cash gift or inheritance. If you're fortunate enough to receive a cash gift or inheritance you could use this as your deposit but again, watch out for the genuine savings rule. Some lenders may accept a 10% deposit made of a gift or inheritance, but you need to do your research.
Aside from LMI costs and more scrutiny from lenders, getting a mortgage with a 5% deposit means having a smaller deposit. This means borrowing more money and therefore paying more interest.
It also means having less equity in your property, which is potentially risky if your property falls in value and you can't repay your mortgage.
Let's look at both situations.
A smaller deposit means paying more in interest
Getting a loan with such a small deposit inevitably means paying more in interest over time. To get a clearer idea of the difference in interest costs, use our loan repayment calculator and enter your borrowing details. Use the same interest rate and loan term but try entering different loan amounts. The difference in interest you'll pay over the life of the loan can be significant. Here's an example:
Property cost: $600,000
20% deposit = $120,000 (loan amount of $480,000)
Interest rate: 3.65%
Loan term: 30 years
Monthly repayments: $2,195.81
Total interest payable: $310,490.12
Property cost: $600,000
5% deposit = $30,000 (loan amount of $570,000)
Interest rate: 3.65%
Loan term: 30 years
Monthly repayments: $2,607.52
Total interest payable: $368,707.02
The risk of negative equity
Equity refers to the amount of your property that you actually own. In other words, the value of the property minus the mortgage debt. If you buy a home with a 20% deposit you have 20% equity at the start. As you repay the loan principal (the money you borrowed), your equity increases.
But if property prices fall (as they sometimes do) your equity will decrease. If you'd paid off half your mortgage then you're still in a decent position. But if you've just bought a property with only a 5% deposit then even a small price fall could see you end up in negative equity. Having negative equity makes it much harder to sell your property or refinance your mortgage.
As long as you keep making repayments on the mortgage principal your equity should increase in the long term.
Frequently Asked Questions
Many Australian banks and lenders offer 95% LVR home loans, including major banks like ANZ, CBA, and NAB. However, strict eligibility criteria apply and the amount of LMI payable to secure one of these loans is very high.
LVR stands for Loan-to-Value Ratio. A 95% LVR means the loan amount is 95% of the property's value, and the borrower needs just 5% as a deposit. For instance, on an $800,000 loan, a 95% LVR is a $40,000 deposit and $760,000 loan.
Yes, it is possible to buy a house in Australia with a 5% deposit with a 95% home loan, where the lender finances the remaining 95% of the property value. However, these loans typically require you to pay Lender's Mortgage Insurance (LMI) unless you qualify for a government scheme, like the First Home Loan Deposit Scheme.
In Australia, the highest percent mortgage you can typically get is 95% LVR, meaning you need a minimum 5% deposit. Some lenders may offer 100% loans under specific conditions, such as having a guarantor.
Yes, it is possible to buy an investment property with a 5% deposit. Your elgiibilty depends on your personal income and debts, and the type and price of the property.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio
Richard's expertise
Richard has written 562 Finder guides across topics including:
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Lenders have tightened their lending standards recently, and borrowers with smaller deposits have had a tougher time getting approved.