A Risk Fee is a once-off charge payable by you when the amount of money you borrow for the purchase of a home or asset if higher than that lender’s acceptable LVR. For a home loan, this is usually 80% of the value of the home (80% LVR). The fee is charged to reduce the possible financial loss that a lender may incur if you are unable to repay your loan.
While Lender’s Mortgage Insurance (LMI) is a type of risk fee, usually when a lender charges you a risk fee, it’s a fee in place of LMI. Low Doc Loans are an example where some lenders may charge you a risk fee when the amount you borrow is higher than 60% of the value of the property i.e. a 60% LVR.
The risk fee can be significant is size, so it’s important to be aware of the amount and the impact it may have on how much you can borrow. We help you you determine if this fee is applicable in your circumstances.
