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To what percentage is your home mortgaged.


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#1 chelley

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Posted 15 November 2012 - 12:10 PM

Background is we have just started looking at a property for sale. It is our DREAM position. However the timing is not ideal.

After lengthy discussions with the broker he thinks we will be approved for the loan but it will be at 95% which is the lending maximum.

Now I will admit I am not the most financially savvy person in the world - hubby is more so than me.

It means that we will be having to pay a crap load of mortgage insurance on top of the stamp duty because we are above the 80% and then 90% loan ration.

What is more important to me is what the monthly loan amounts are and how servicable then loan is.

So my question is to what percentage is your loan mortgaged. Does this make you uncomfortable or are you like me and just thinking about loan servicability?


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#2 aChocLover

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Posted 15 November 2012 - 12:54 PM

You mean, of its market value?
For us we had the added advantage of equity in the land, so our mortgage is about 65% of a conservative market value.

Mortgage to income is ~35%.

In general, I'm more worried about servicability but if I were taking out a loan at 95%, I'd want to be confident that there wasn't going to be a dip in property values in the near future (ie, that your property value becomes less than your mortgage).

#3 flowerrose

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Posted 15 November 2012 - 01:09 PM

We presently have our family home and an investment property and we are mortgaged to just under 40% of their total value (conservative estimate), with the debt stacked on the investment property for tax gearing purposes.

It hasn't always been like that. I bought my first home at 18 with 97.5% mortgage and could barely service the repayments. It was a struggle. When DH and I bought together in Oz we had a 30% deposit from selling my house int he UK. At that time I was unable to work and we could just about meet the repayments along with our other commitments. We were looking at other, more expensive houses, but I'm so glad we didn't buy them. It would have been a real headache.

Once I started working again things got easier but DH is very conscious of debt so anything spare we had went into overpaying the mortgage, which we had nearly paid off in eight years. Which allowed us to step up the chain and invest without exposing ourselves too much.

That is basically our investment game-plan. To cull this mortgage asap and then buy another property or move up again.


Generally I only worry about serviceability, including what happens if interest rates go up significantly. I want to know I have a contingency, whether that's enough to meet it, or room for a lodger. That and resale - I need to know that we won't lose too much if we do have to fire-sell.

#4 Daybreak

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Posted 15 November 2012 - 01:38 PM

We have approximately a 20% deposit, depending on what we end up buying. When we first started looking, it was 10% but since I haven't been more than casually employed since then, it's had time to grow (meanwhile, we can't get a loan, because of my employment, even though we can obviously save!)
I don't like having debt, but at the same time, we can't live where we are forever, so as long as we can pay the loan (preferably on one wage so that I can stay at home with kids for a while!) I'm happy.
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#5 bluenomi

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Posted 15 November 2012 - 01:45 PM

We bought at the height of the market (lucky us wink.gif ) so ended up borrowing 100%.

We had enough cash to pay the mortage insurance and other costs but not enough for a deposit as well. It was only about 6 months after we got our loan they stopped doing them thanks to the GFC so we were lucky to get in when we did. We had no issue with the repayments and could have borrowed more but didn't want to risk it in case interest rates went up.

We recently looked at buying another place and while we would have no issue with higher repayments, the deposit would be an issue. Since we had a 100% loan we don't have enough equity in our place to give us a decent deposit on a new place. So we have to stay here for another few years at least.

The equity is the main issue with 95-100% loans. It takes longer to build it up but if you aren't planning or needing to sell in a hurry its not a problem.
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#6 chelley

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Posted 15 November 2012 - 02:04 PM

Thanks for all the replies girls

QUOTE(aChocLover @ Nov 15 2012, 01:54 PM) View Post

You mean, of its market value?
For us we had the added advantage of equity in the land, so our mortgage is about 65% of a conservative market value.

Mortgage to income is ~35%.

In general, I'm more worried about servicability but if I were taking out a loan at 95%, I'd want to be confident that there wasn't going to be a dip in property values in the near future (ie, that your property value becomes less than your mortgage).


That is a good point. We intend to keep this property and this be our 'forever home' so we won't consider selling.We would eventually plan to do a knock down and rebuild.

QUOTE(flowerrose @ Nov 15 2012, 02:09 PM) View Post

We presently have our family home and an investment property and we are mortgaged to just under 40% of their total value (conservative estimate), with the debt stacked on the investment property for tax gearing purposes.

It hasn't always been like that. I bought my first home at 18 with 97.5% mortgage and could barely service the repayments. It was a struggle. When DH and I bought together in Oz we had a 30% deposit from selling my house int he UK. At that time I was unable to work and we could just about meet the repayments along with our other commitments. We were looking at other, more expensive houses, but I'm so glad we didn't buy them. It would have been a real headache.

Once I started working again things got easier but DH is very conscious of debt so anything spare we had went into overpaying the mortgage, which we had nearly paid off in eight years. Which allowed us to step up the chain and invest without exposing ourselves too much.

That is basically our investment game-plan. To cull this mortgage asap and then buy another property or move up again.
Generally I only worry about serviceability, including what happens if interest rates go up significantly. I want to know I have a contingency, whether that's enough to meet it, or room for a lodger. That and resale - I need to know that we won't lose too much if we do have to fire-sell.



Thanks we already have an investment property which brings some nice tax returns for us. It works out better for us to keep the property then sell and just have the property we are looking at.

We are considering a fixed interest rate for peace of mind while the kids are little.

QUOTE(Daybreak @ Nov 15 2012, 02:38 PM) View Post

We have approximately a 20% deposit, depending on what we end up buying. When we first started looking, it was 10% but since I haven't been more than casually employed since then, it's had time to grow (meanwhile, we can't get a loan, because of my employment, even though we can obviously save!)
I don't like having debt, but at the same time, we can't live where we are forever, so as long as we can pay the loan (preferably on one wage so that I can stay at home with kids for a while!) I'm happy.


Good that the deposit has had time to grow. I am already at home with the kids. Considering we have had our last baby and my time back at work will only increase our ability to repay the loan should only improve with time because the repayments have been factored in on basically one salary.

It doesn't leave much for renovating - very little at all actually and the broker said because we would be borrowed to capacity the bank wouldn't lend us anymore to to renovate.

QUOTE(bluenomi @ Nov 15 2012, 02:45 PM) View Post

We bought at the height of the market (lucky us wink.gif ) so ended up borrowing 100%.

We had enough cash to pay the mortage insurance and other costs but not enough for a deposit as well. It was only about 6 months after we got our loan they stopped doing them thanks to the GFC so we were lucky to get in when we did. We had no issue with the repayments and could have borrowed more but didn't want to risk it in case interest rates went up.

We recently looked at buying another place and while we would have no issue with higher repayments, the deposit would be an issue. Since we had a 100% loan we don't have enough equity in our place to give us a decent deposit on a new place. So we have to stay here for another few years at least.

The equity is the main issue with 95-100% loans. It takes longer to build it up but if you aren't planning or needing to sell in a hurry its not a problem.


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#7 Lizzie1

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Posted 15 November 2012 - 02:27 PM

We borrowed 95% of our loan, we had enough for a small deposit along with the stamp duty and the LMI. We've had our place for just over a year now and don't have a problem with the repayments... we're also about to go onto one wage (I won't get any paid maternity leave - except the gov money) but we should hopefully still be ok until I go back to work.
I was worried about borrowing so much, but it would have taken us forever to save enough for a 20% deposit. Now that we are doing it it's no where as bad as I thought it would be.
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#8 la_jeune_mariée

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Posted 15 November 2012 - 07:21 PM

We recently upgraded and we kept our old apartment as an investment property. I think the ratio currently sits at about 30/70 in the banks favour.

We wouldn't feel comfortable borrowing more than 80% but really the main concern should be serviceability. Borrowing 95% when you plan on staying there for a decade or more and you have plenty spare to cover a large increase in interest rates is different to barely scraping the 95% together and then living paycheque to paycheque. I'd just make sure you had a good whack of cash saved up to cover any unexpected repairs.
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#9 hanes

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Posted 15 November 2012 - 08:11 PM

Do you have the option of borrowing the value of the mortgage insurance through equity from family (parents, in laws etc.)??

They only have to be guarantor for a small portion of the loan (eg. $50,000 of a $400,000 loan) and it would be separate to your actual loan.

This should help reduce monthly repayments and cash flow etc. So better loan serviceability.

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#10 chelley

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Posted 15 November 2012 - 10:56 PM

QUOTE(hanes @ Nov 15 2012, 09:11 PM) View Post

Do you have the option of borrowing the value of the mortgage insurance through equity from family (parents, in laws etc.)??

They only have to be guarantor for a small portion of the loan (eg. $50,000 of a $400,000 loan) and it would be separate to your actual loan.

This should help reduce monthly repayments and cash flow etc. So better loan serviceability.


Our families are not willing and the other not able to help us out in this regard.
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#11 Cole29*

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Posted 16 November 2012 - 07:54 AM

QUOTE(bluenomi @ Nov 15 2012, 02:45 PM) View Post

We bought at the height of the market (lucky us wink.gif ) so ended up borrowing 100%.

We had enough cash to pay the mortage insurance and other costs but not enough for a deposit as well. It was only about 6 months after we got our loan they stopped doing them thanks to the GFC so we were lucky to get in when we did. We had no issue with the repayments and could have borrowed more but didn't want to risk it in case interest rates went up.

The equity is the main issue with 95-100% loans. It takes longer to build it up but if you aren't planning or needing to sell in a hurry its not a problem.


This is us also. 100% borrowed, but we have no issues making our repayments and the value .of our house has increased so it's all good.

In terms of current value and what we owe, it's about 80%.

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#12 Thelma

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Posted 16 November 2012 - 08:30 AM

we're about 65%, but I think our first house was about 95%.

For me, the two things I would take into consideration are servicability, and if we had to sell tomorrow for some unforseen circumstance, that we would come out on top.

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Posted 16 November 2012 - 09:20 AM

Currently we are sitting at about 85%, we did have it down to about 50% but had to increase it to do some extensions.

When we brought our house I think we borrowed about 90%.

#14 flowerrose

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Posted 16 November 2012 - 10:16 AM

QUOTE(Thelma @ Nov 16 2012, 06:30 AM) View Post

For me, the two things I would take into consideration are servicability, and if we had to sell tomorrow for some unforseen circumstance, that we would come out on top.


You and I have the same kind of thinking!

#15 drom

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Posted 16 November 2012 - 12:04 PM

QUOTE(aChocLover @ Nov 15 2012, 01:54 PM) View Post

For us we had the added advantage of equity in the land, so our mortgage is about 65% of a conservative market value.


Same for us. Our land was paid out in full before we built.

Our mortgage is very small compared to most and if my calcs are correct sits at about 24% of the current market value of the house.

Like the others, I worry more about serviceability on a month by month basis - but try to also be conscious to not over capitalise. And like Thelma, would prefer to not knowingly put myself in a position where if I did have to sell for unforeseen circumstances that I would come out still owing money.

To be honest, I also worry about what is happening worldwide and how that might impact the Aussie housing market. But, I am a worry wart. blush.gif







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