Buyers Find Borrowing Sweet Spot
Home buyers are most comfortable borrowing up to 80 per cent of their property’s value and one in ten buyers are comfortable borrowing nearly the entire value of a property, a survey by Loan Market has found.
The online survey of its home loan customers found that 44 per cent of the 662 respondents said they want to purchase below a 80 per cent Loan-to-Value (LVR) ratio – to help them avoid charges such as Lenders Mortgage Insurance (LMI).
Loan Market director Mark De Martino said that with property market’s running hot around the country, many buyers plan and establish their finance goals and limits well before they start their property search.
“When the real estate market gets going like it is now, buyers have to weigh up their emotional attraction to a property against what they’re comfortable borrowing,” Mr De Martino said.
“Buyers who get their finances together early in purchasing process will be able to bid at auctions or private treaties more confidently because they’ll know the exact impact borrowing more or less would have on their loan repayments and household finances,” he said.
Mr De Martino said that it was no surprise to see 10 per cent of borrowers completely comfortable borrowing up to 97 per cent of a property price.
“In some situations the only way to crack into a hot property market is to borrow closer to the value of your property. This can be a successful strategy for buyers who do their homework and make sure they get a home loan that matches their personal and financial situation.”
What percentage of your property value would you be comfortable borrowing?
|A) more than 97%||11%||10%|
|D) less than 80%||36%||44%|