Lender’s Mortgage Insurance
Lender’s Mortgage Insurance (LMI) is a premium that is usually on charged by lenders when less than 20% deposit is available. It can provide insurance for the lender should a situation arise where there is a shortfall in paying out a loan. One of the major benefits of LMI is that it allows the purchaser to borrow more than 80% of a property value. LMI does not however protect one personally in the event of missed repayments or a shortfall in loan payout. Some lenders can add this premium to your loan amount to minimize costs from your own funds. However, some lenders do not use LMI but include costs such as a Loan Equalization Fee (LEF) to minimize their risks. This often provides an option where genuine savings cannot be evidenced.

Types of Loans

Fully Verified Loans

If you have all the required paperwork and fit the lending criteria for a specific lender, your application is known as fully verified. Normally, full verification includes income, assets, liabilities etc and will give you access a large range of products.

"LoDoc" Loans
LoDoc loans can be ideal for self-employed borrowers that do not have the required paperwork available for a fully verified loan. . Normally, the borrower will self certify their income and ability to meet repayments by completing a declaration with your application. Most lo-doc loans require a minimum 20% deposit or equivalent usable equity in another property. No-doc loans can be ideal where the borrower prefers not to disclose income, assets or liabilities. They require a substantial deposit or access to useable equity normally 35%+ of the property valuation.

Borrowing Capacity
Borrowing capacity may differ greatly from one lender to the next as lending policies vary as much as there are products on offer, and is impacted by variables such as source of income and amount, type and amount of deposit, type of loan, other financial commitments, location of property etc. All variables must be considered carefully when calculating borrowing capacity especially the amount to be repayed, not just the loan amount the lender says is accessable.

Types of Employment
This is one topic where policy varies greatly from one lender to the next. Contract positions may be prohibitive with one lender, while they may not be with another. Correct presentation of the application to the right lender for an individual's situation is a major key to securing finance.

Credit Reports
With the buyer's permission, a copy of the buyer's credit file is obtained prior to applying with a lender. The credit report contains information relating to past finance applications, payment defaults, judgments etc. It is important to understand that even the smallest impairment on the credit file can effect securing finance with some lenders.