This month we wanted to break down one of the most talked-about changes in the lending space right now: UBank’s new policy offering eligible borrowers the ability to borrow up to 90 per cent of a property’s value without paying Lenders Mortgage Insurance.
It has created a lot of interest across the market, so here’s a clear and simple overview of what it actually means.
What the policy involves
UBank’s updated lending criteria allows certain applicants to borrow up to 90 per cent Loan-to-Value Ratio (LVR) with no LMI payable. Normally, LMI is triggered once a borrower goes above 80 per cent LVR, so removing this cost at higher lending levels can be a meaningful saving.
It’s also important to keep in mind that this policy applies only in certain situations. As with any lender initiative, there are eligibility requirements that need to be met.
Who may qualify
While every application is assessed on its own merits, the policy is largely geared toward strong, low-risk applicants. Typically, this may include borrowers with stable incomes, clean credit histories, and a clear financial profile. The property itself must also meet UBank’s requirements, and lending limits can apply.
Because of these conditions, this policy is not a blanket offering. Instead, it is assessed case-by-case to determine if the applicant fits the lender’s parameters.
Why it has generated interest
Removing the need for LMI at 90 per cent LVR can make a noticeable difference to upfront costs. For some buyers, it may mean being able to purchase sooner because they don’t need as large a deposit. For others, it may simply reduce the overall cost of purchasing.
However, while this sounds appealing at face value, it’s not the right fit for every buyer. Some borrowers may benefit more from a different structure, a different lender or an alternative strategy altogether.
Considerations to keep in mind
Policies like this can be helpful, but they come with fine print. Higher-LVR lending still means borrowing more, which increases repayments. Interest rate offerings may differ, and lending conditions can tighten depending on the applicant’s situation.
It’s a good example of why no single policy should be seen as a universal solution. What works well for one buyer may not suit another.
Making sense of your options
If you are exploring your borrowing options or trying to understand where you sit in the current market, the team at Madd is here to help you work through it. Every situation is different, and the best outcome comes from getting personalised advice based on your goals, your finances and your timeline.
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