Low Deposit Fee

The Low Deposit Fee (LDF) is a one-off amount payable by the borrower at settlement if their initial deposit (for purchases) or amount of equity in their security property (for refinances and top-ups) is less than 20% of the assessed market value of the property. That means, if the loan to value ratio (LVR) is greater than 80%, generally a LDF will be payable. 

Other lenders may refer to Lenders Mortgage Insurance (LMI) when lending above 80% LVR. Macquarie doesn’t offer LMI and instead uses the LDF in these lending scenarios. The LDF contributes to us (the lender) recovering some of the potential losses that we (the lender) may encounter if your client is unable to repay their loan.

The LDF for a given loan is primarily based on the loan amount and the LVR. Other factors such as the loan purpose, use of security and employment type can also impact the cost of the LDF for a given loan. Generally, a higher LVR and/or loan amount will result in a higher LDF being payable.

To calculate the Low Deposit Fee, download the LDF Calculator. 

There are two options to pay the LDF, including:

1. The fee can be deducted from the available loan funds and collected at loan settlement. 
2. The fee can be capitalised into the loan amount. This will increase the loan amount, which may impact servicing as repayments will also increase. Please note, this will also increase the total interest paid over the duration of the loan term.

If your client is looking to purchase a property for $700,000, they would generally need a 20% deposit ($140,000). By utilising LDF, we may provide finance of up to 90% of the property value. This means your client may be able to purchase this property with a 10% deposit ($70,000), and a $630,000 loan.  

Note: In this scenario, if they chose to capitalise the LDF, the loan amount would be higher than $630,000. 

Where applicable, the LDF will be initially calculated based on the loan amount at original settlement for vacant land.  

When your client is at the point of construction, an internal refinance on the land is required and an increase is to be submitted for the construction portion of the loan.

If the LVR on the loan remains >80%:

1. We’ll calculate the total LDF payable based on the total LVR and loan amount, then
2. We’ll deduct the original LDF already paid from the new LDF payable.

Please note: Where your client is at the point of construction and the internal refinanced loan has an LVR less than or equal to 80%, we’ll not be able to refund the original LDF paid on the vacant land. 

If your client is unable to repay their loan and/or a default event occurs, and we (the lender) sustain a loss after the property is sold, then the LDF contributes to us (the lender) recovering some of the loss. We may seek to recover any loss or shortfall from your client and/or their guarantors.

It’s important not to confuse LDF with any Mortgage Protection Insurance. If your client defaults on their loan, the LDF doesn’t provide your client, the borrower, with any protection.