Bank equity percentage

Discussion in 'Loans & Mortgage Brokers' started by hash_investor, 17th Feb, 2020.

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  1. hash_investor

    hash_investor Well-Known Member

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    Hi guys, question is if bank pays 80% of the property is that mentioned anywhere in the mortgage documents? What impact does percentage of equity has on your mortgage? Why get a higher val if it doesn't reduce bank percentage?
     
    hash_investor, 17th Feb, 2020
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Higher borrowing cap

    Access to equity for various personal or Investment need.

    With some lenders, lower rate, because they price rate for risk

    Im sure there are other reasons

    ta
    rolf
     
    Rolf Latham, 17th Feb, 2020
    #2
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    A bank doesn't pay 80% of the property, but lends it to the borrower who will then use it to pay for the property. There maybe a requirement that the loan not exceed X% of the value of the property.
    A mortgage is security for the loan. A higher value isn't needed for a purchase - but it might make you feel better.
     
    Terry_w, 17th Feb, 2020
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  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Not sure where this idea comes from, I'll use a simple example below.
    If you buy a property worth $1M for and have an $800K loan against it = 80% LVR
    If the value of the property increases to $1.2M and your loan is still $800K then the LVR 'reduces' from 80% to 66%
     
    Lindsay_W, 18th Feb, 2020
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