Owner occupied home loan guide

If you are a homeowner chances are you may not have reviewed your home loan for some time, in fact the ACCC suggested that Australians with loans that are 3-5 years old are, on average, paying an additional 0.58% over the loan's lifespan.

Even a single percentage point can have a significant impact. If you have a $500,000 home loan with an interest rate of 6% and you're paying 0.58 percentage points more than the best available rate, you're essentially paying more than necessary in interest. This translates to an average of $250 extra per month, $2,900 per year, and 87,000 over a 30-year loan term.

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What is home equity? 
If you’re someone who has diligently paid your mortgage for several years, or the property has increased in value there's a good chance you've accumulated a substantial amount of equity. This equity can be a valuable resource over time, allowing you to explore various financial opportunities such as purchasing an additional investment property, undertaking home renovations, purchasing a car, paying for a holiday or pursuing other financial objectives.

In straightforward terms, home equity refers to the gap between the current market value of your home and the outstanding balance on any loans secured by that property.

How much can I borrow?
Most lenders prefer to lend 80% LVR (loan to value ratio)  against your owner occupied home, however some lenders will allow you to borrow 90% or 95%.

Book a call with one of our mortgage brokers to find out more or use our borrowing power calculator 

What is Loan to Value Ratio (LVR)?
The Loan to Value Ratio (LVR) represents the amount you're borrowing as a percentage of the property's value that you intend to purchase. A larger deposit results in a lower LVR.

Here's an explanation of the Loan to Value Ratio and its significance in the context of securing your home loan.

What's Excluded from the Loan Amount When Calculating LVR?
It's essential to keep in mind that certain upfront expenses, such as conveyancing fees and stamp duty, are not factored into the loan amount when determining the LVR.

How to Calculate Your LVR
To calculate the LVR, divide the loan amount by the property's purchase price or valuation, expressed as a percentage.

For instance, suppose you wish to borrow $450,000, and the property is valued at $600,000. The LVR for your home loan would be calculated as follows

($450,000 loan ÷ $600,000 property value) x 100 = 75% LVR.

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