80% LVR Home Loans

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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, updated on August 8th, 2023       

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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!

What is the meaning of ‘80% LVR home loans’?

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.

How can an 80% LVR home loan save me money?

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

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.

What are the benefits of applying for an 80% LVR loan?

Here’s more of your frequently asked questions about 80% LVR home loans

How do I calculate LVR?

Your loan to value ratio is calculated by dividing your loan amount by your property’s value and multiplying that number by 100 to get a percentage.  For example:

(Loan amount ÷ value of property) x 100 = LVR

(400,000 ÷ 500,000) x 100 = 80% LVR

What are my other options if I don't have a 20% deposit?

Some of your options include applying for the First Home Owner Grant (FHOG) or First Home Loan Deposit Scheme (FHLDS) if you’re a first homebuyer.  The FHOG is a scheme administered by state governments to assist by way of a lump sum cash grant, while the FHLDS guarantees up to 15% of your deposit, enabling you to pay as little as 5% without LMI.  Alternatively, you can seek the help of a close relative (usually a parent) to become a guarantor and offer their own home equity as security to enable you to get a loan without having to pay LMI.

Can lenders waive Lenders Mortgage Insurance if I have more than 80% LVR?

Yes – some lenders do agree to waive LMI for certain professions which are considered lower risk.  There is often a cap of $2M for such loans, and with many lenders, the borrower has to prove an income of more than $150,000 p.a.  The profession exemption list can include:

  • Medical professionals (including doctors, surgeons, dentists, optometrists, pharmacists, chiropractors, and veterinarians.)
  • Legal professionals (including barrister, judge, solicitor or lawyer)
  • Accountants and financial professionals (including financial managers, chief financial officers, auditors and actuaries)
  • Mining specialists (including geologists, surveyors and geophysicists)
  • Professional athletes (providing you have an accredited agent or manager)
  • Entertainment industry members (including TV, music, film, theatre and fashion professionals)
How do I get an 80% LVR home loan when refinancing?

As house prices rise and you gradually pay off the principal of your loan, the LVR of your home reduces.  There will come a time when you have far more than 20% of the value of your house in equity (which is the difference between what your house is worth and what you owe on your current home loan). Once this happens, you can refinance your home using your existing home equity and not have to worry about LMI.

Should I negotiate with my lender if I have a 20% deposit and I'm not offered a competitive interest rate?

Yes – if you’re offering a 20% deposit as security, you are considered a prime borrower and should therefore be offered the most preferential loans with low interest rates and low or no fees.

Are there some loans that require more than a 20% deposit?

Yes – there are some ‘super prime’ loans which offer the lowest possible interest rates available in Australia, which may require deposits of between 30% and 50%.  In addition, if you are a temporary resident, have a poor credit rating or are self-employed and don’t have sufficient documents to provide to your lender, you may be required to provide a larger deposit to offset associated risk.

When comparing standard home loans, what does 'comparison rate' mean?

This rate takes into account a home loan’s fees in addition to the advertised interest rate.  Using the loan’s interest rate alone doesn’t take these additional costs into account, so the comparison rate provides a more accurate reflection of your loan’s cost.

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