The Loan to Value Ratio is a calculation that financial lending institutions use to assess the risk of approving a loan to a borrower. The Loan to Value Ratio is expressed as a percentage of the value of your house. It is calculated by dividing your loan amount/s by the value of the security property/ies. For example, a loan amount of $500,000 against a property worth $700,000 would have an LVR of 71%.
Frequently asked questions
Lenders Mortgage Insurance (LMI) is insurance that protects the lender in the event the borrower defaults and the security property is sold and the funds from the proceeds of the sale are not enough to discharge on the loan. The LMI then pays the lender the shortfall. The rights to recover the shortfall from all of the parties on the loan (borrowers) are then transferred across to the LMI who will pursue the shortfall. The cost of LMI insurance is a one off payment at the start of the loan and should not be confused with Building insurance or Income Protection Insurance. It can be added onto the loan amount.
If approved, you can borrow up to 95% of the value of your property (Loan to Value Ratio “LVR”) subject to lending criteria being met but you may have a different interest rate or need to pay Lenders Mortgage Insurance if your loan amount is more than 80% of the value of your property. The premium for Lenders Mortgage Insurance may be able to be added to your loan (up to 97% LVR).
Your repayments take into account the annual interest rate, loan term, repayment frequency, loan amount and whether you wish to pay for an agreed period of time (principal and Interest) or just the interest (Interest Only). All principal must be repaid in full at the end of the term of the loan.
Principal and Interest (P&I) loan repayments are calculated so that you pay back all of the money you borrowed (principal) and all of the interest that will be charged over the term of your loan. When the term ends (usually 30 years) you will end up with a nil balance on your loan.
An interest only loan allows you to pay only the interest on the loan, rather than paying back both principal and interest. At the end of the interest only period (usually five years), you still owe the full amount you originally borrowed if you haven’t made voluntary repayments. The advantage with the interest only feature is that the loan repayments are lower during this period, however unless you have made voluntary repayments of principal, you will have higher repayments for the remaining term of the loan to ensure that you will end up with a nil balance at the end of your loan.
Interest is calculated on the daily outstanding balance of your loan and charged to your loan account monthly. You can reduce the interest you will pay on your loan by making extra repayments or depositing additional funds into your loan account to reduce your daily balance (Origin does not charge you for this). You may be able to redraw these funds when you need them depending how your Origin loan is set up.
Yes. Once approved, it is really easy. Our loans are designed to allow you to access the equity you have built up in your property (that is the difference between what your house is worth, and what you owe). Depending on your circumstances, you may be able to use the funds to acquire other assets such as shares or an investment property, even a new car or a holiday.
Yes, you can make extra repayments either by increasing your direct debit repayment, your salary credit amount or one-off amounts via internet. We do not charge you for making extra repayments on a variable rate account. Fixed rate, however, has a minimum repayment amount of $20,000 per year and if you exceed this we may charge break fees.
A redraw facility is a facility where you can withdraw money from your loan account if you have made extra repayments to your home loan. The benefit of having a redraw facility is that the additional repayments can reduce the interest you pay, but you can withdraw them easily when you need them.