After a $310k Loan at 95% LVR with LMI. Rent History as Genuine Savings?

Hi. First time posting here.

I'm getting the run around a bit. I am a high income earner and am looking to purchase my first property to live in. I have not owned a property yet.

I am looking at a $310,000 two bedroom apartment in Melbourne, decent sized, with car space. Not sure if 50m2 internal size or not but am receiving details shortly. I have approx $20k but some is from tax return and some will be from sale of a vehicle. I am wondering if there is anywhere that will lend a 95% LVR loan with LMI.

My rental history for the last year will show that I have paid about $27k per annum in rent. I have heard it's possible to use rent in lieu of genuine savings.

Can anyone help?

Cheers,
Rob.

 

I suspect an asking price of $310k is going to be a very small apartment in Melbourne. Probably 1 bedroom less than 50sqm which will present its own challenges. But that's not the real problem.

There are a few lenders that will view your rent as genuine savings, but with only $20k available, I think you're still going to be about $7-$9k short.

Assuming you're a first home buyer, you won't have to pay any stamp duty. You do still have roughly $4.5k in purchase costs.

You're also going to have to have enough funds for about $7.5k in LMI. There are a couple of lenders that will add this to the loan, but they definitely will require genuine savings of at least 5%. LMI can be avoided for 95% loans using the FHLDS, but this also requires proper genuine savings. Being a high income earner might also exclude you from this scheme (if you earn over $125k).

Thus you need:
Purchase costs: $4.5k
LMI: $7.5k
5% deposit: $15.5k
Total: $27,500


Let's be frank. You've stated you're a high income earner but have no savings and you're relying on a tax refund to come up with essentially a negligible deposit. You probably need to realign some priorities and actually save some money before you're ready to buy a property.

Do a budget. Figure out what you can save and put that away every pay cycle before you pay all your other bills. When you've got 12% (enough to cover a 10% deposit & the various costs), you'll be in a much better position to purchase.

Realistically if you are on a high income, this should take less than 6 months. Melbourne prices aren't going up right now, time is on your side.

 

Thanks Peter.

You are quite right in being frank and saying I need to align some priorities. Thanks for giving a broken down cost. That’s helpful to realise what I need to save up for.

Covid-19 has actually been a real help in way of saving as luckily my work hasn’t been severely affected but my travel has and I do love travelling. Hopefully by October or November I will have closer to $30k saved up.

Thanks for taking the time to reply,
Rob.

 

300k wont get you much in melbourne.

the thinking about priorities has to include, should i actively save and aim for a more expensive property that might have better growth prospects?

 

Size of the unit is very important for both choice of lenders (especially when looking at over 80% lending) and for future resale.

Lenders that will consider rental as genuine savings include Westpac, St George/Bank of Melbourne, Adelaide Bank, AMB, AMP, Bankwest, CBA, NAB, etc.

So rental ledger as genuine savings is not going to be an issue with a lot of lenders.

 

I've seen clients purchase single bedroom, small apartments over time, then sell them later. The capital growth tends to be negligible. Ultimately small apartments only cater to a very small sector of the market, which tends to outgrow them quite quickly.