Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

"From the minute you call me to the minute we close, I have your back. No hassles, no banker’s hours & quick response times." - Scott Storace

  • Home Loans up to $3,000,000
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80-10-10 Loans: Multi-Purpose Mortgages

One Size Doesn’t Fit All

There’s no doubt that it’s been a historic decade in terms of finances. We’ve been up a bit, down a bit and up a bit again. But all of this on the back of a sudden down turn in 2006, the legacy of which has obviously left us with a large amount of caution in the market. This is fine, simply because a bit of caution is a good thing. At the moment, borrowing a significant proportion of the value of a property is again possible. We’re seeing more and more people taking an 80-10-10 loan which, in effect, is a 90% LTV loan. This shows that some banks are comfortable again lending good amounts of cash…if they find your personal situation is agreeable.

80-10-10 financing is a little bit different from most home loans. It often means that buyers can find a way to purchase their first home without spending years and years saving up for a large initial down payment. The break down is quite simple: you have 80% of the value of the property loaned to you as a first loan. The next 10% of the value of the property is received with a second loan. And the final 10% is accounted for by way of your cash investment. Effectively this means that first time buyers can get their first property with just a 10% deposit. They get into a home more quickly. Equally important, they don’t have to stretch themselves so far. In a rising market, waiting longer to save a deposit can mean an increase in the price you pay for the property.

There are lower down payment mortgages of course. The FHA loan only requires a 3.50% down payment. But the mortgage insurance payment can be a tough pill to swallow. That’s why many FHA homeowners are seeking to eliminate their mortgage insurance payment by refinancing into an 80-10-10 loan. By adding the second loan, the mortgage insurance payment is eradicated. This reduces the total monthly mortgage payment and eases the financial burden on the homeowner.

Additionally, there are people who prefer 80-10-10 loans, even though they have a 20% deposit available. It keeps the payments low and their cash free. With rates this low, it’s cheap to borrow money. They can keep their investments hard at work while making a low monthly payment. In short, you can move in with a smaller down payment, along with avoiding paying PMI.

The other great advantage of opting for an 80-10-10 set up is that you can hold back some of your deposit for other things. Many people want to put their own mark on a home but can’t afford to redecorate when they move in. With an 80-10-10 loan, you can retain some of your assets to redecorate, buy new furniture, or even build an extension!

There’s no doubt that an 80-10-10 loan can really open up avenues for buyers of all types. Speak to me to find out exactly what options are available to you.

Scott Storace

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