What you need to know about Low Equity Margins

A Low Equity Margin applies to your home loan

When you take out a home loan if you borrow more than 80% of the property’s value a Low Equity Margin will apply. This margin is a percentage amount that is added to the interest rate on your home loan and reflects the extra risk involved.

Reviewing your Low Equity Margin

The good news is that once the amount of your home loan is less than 80% of the property’s value you can arrange for the Low Equity Margin to be reviewed.

To work this out, please divide the total value of your home loan, by the total value of your property, and then multiply the answer by 100.

LEM equation

Your borrowing could fall below 80% of your property's value if, either your property’s value increases or you pay off part of your home loan. 

If the result of the calculation is less than 80%, it’s important that you let us know, so a review can be arranged.

Removing your Low Equity Margin

When you come along for your review you'll need to bring the latest valuation report for your property, such as a registered valuation or government valuation.

Once we can see that your borrowing is less than 80% of the property’s value the Low Equity Margin can be reviewed.

If your home loan is on a variable rate the margin will be removed immediately, provided it has been applied for at least six months. For home loans on a fixed or capped rate term the margin will be removed the day after the end of the term.