Only one in 10 borrowers are comfortable borrowing as much as 97 per cent of a property's sale price, according to a recent survey.
However, the survey, conducted by Loan Market, also showed that some buyers are desperate to “crack” a hot market, Loan Market director Mark De Martino said.
“In some situations, the only way to crack into a hot property market is to borrow closer to the value of your property,” he said.
Mr De Martino added that it was no surprise to see 10 per cent of borrowers entirely comfortable with borrowing up to 97 per cent of a property price.
“This can be a successful strategy for buyers who do their homework and make sure they get a home loan that matches their personal and financial situation,” he said.
The survey found that 44 per cent of the 662 respondents said they want to purchase below 80 per cent loan-to-value ratio (LVR) to help them avoid charges such as lender's mortgage insurance (LMI).
“When the real estate market gets going like it is now, buyers have to weigh up their emotional attraction to a property against what they’re comfortable borrowing,” Mr De Martino said.
“Buyers who get their finances together early in the purchasing process will be able to bid at auctions or private treaties more confidently because they’ll know the exact impact borrowing more or less would have on their loan repayments and household finances.”