This is an interesting story. One we keep coming back to when we talk about ‘why’ we built LoanDolphin. Doug and his wife had their mind set on purchasing an off the plan property some time ago. They had done some basic calculations online and they were certain that they could afford the loan So they saved over a long time to come up with the 20% deposit on time.
Loyal bank customer
Their goal of a 20% deposit was based on the contract of sale price. The property was worth $600K and they were saving hard towards a $120K deposit. When they received news about the property being ready for them to move in, they started shopping around for property finance options. Being loyal customers they first went into their bank where things were looking positive. They did the paperwork and started the process. Doug and his wife were looking forward to the day they could move into their brand new property.
Then came the valuation from their bank, it was valued at less than the price Doug had agreed to pay for the property. This meant that Doug’s 20% deposit had now gone down to 15%. Doug then realised that in the contract they had to pay for something called LMI, since they are now borrowing more than 80% of the property value.
LMI stands for ‘Lenders Mortgage Insurance’. Despite how you feel about it Lenders Mortgage Insurance protects your lender in the event of you defaulting on your home loan. Although they have the house as security, if property values decline that security may not be enough to cover the outstanding loan when the lender comes to sell it. Lenders Mortgage Insurance should not be confused with mortgage protection insurance, which covers borrowers for the payment of their mortgage instalments.
Doug and his wife were torn. They saved hard but due to a lower valuation they had a shortfall of $12,000. They had to start looking for options. They could either pay the LMI and move in or find out if there were any other options out there. This is when Doug came across LoanDolphin from a community notice board.
LoanDolphin to the rescue
Doug logged onto LoanDolphin.com.au created a free auction and posting where he explained the dilemma and within 2 business days received viable options from many experienced lenders and mortgage brokers who understood his situation. One experienced mortgage broker came up with the best solution for Doug, as he had faced a similar situation many times.
$12K saved, just like that
The solution was to go through a lender who would take the cost of the sale price as opposed to a different valuation. The best part was that this solution didn’t come with a rate compromise. They got a rate similar to what they were quoted with their own bank. When Doug and his partner visited the bank, this was never an option. it’s easy to feel that there are no other options available when your own bank tells you that the valuation is lower than what you are willing to pay for the property.
Why we created LoanDolphin
We created LoanDolphin so that we can provide a platform where people like Doug and his wife can get a truly unbiased and transparent view of what the markets (financial institutions) are willing to offer us. We achieve this by allowing banks and mortgage brokers to fight for your home loan in an open platform. No more shopping around, researching, chasing up banks, brokers and negotiating. We empower you with choice, convenience and more value.
Disclaimer: This blog post has not taken into account your objectives, financial situation or needs. Due to this, before acting on any general advice/information in this communication, you should consider whether it is appropriate to your objectives, financial situation or needs.