hi all
is there a real advantage in borrowing 80% instead of 90% lvr. i understand the mortgage insurance would apply to the 90%.
given if the property is say $60000 at
80% you can borrow $48000 own money $12000
90% you can borrow $54000 own money $6000
i would think the mortgage insurance would not be that expensive on this type of loan amount providing the deal was stand alone.
If the properties are cross collaterised then the MI applies to the total loans which then i can understand the 80% being a preferred option.
The MI would be tax deductabile which lowers the cost a bit more.
Would just give a little bit extra in the hand to buy another property perhaps at 90% lvr.
Do lenders place any restrictions at the 90% lvr arrangements for IP properties.
regards
alfI will leave this to be clarified by the mortgage brokers out there but I will say that 90% will eventually limit you.
There are only 3? insurers now for LMI and they all have limits to borrowings. At some point they will say no more and you will have to increase the deposits.
If you put down 20% deposits on positive cashflow properties then in theory you can go on borrowing forever…………
Enjoy
AD [:0)]
(Andrew)It is good to have an end to journey toward, but it is the journey that matters in the end.
Hi Alf and Andrew,
You guys put this post in the morning around 4am WOW! didn’t sleep ?
I also learn the same thing which Andrew saying..
If you put down 20% deposits on positive cashflow properties then in theory you can go on borrowing forever…………
I think alf making right point but only in short term it will be good or if you are not keep on buying IP.
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AmitI wrote a long reply but it dissappeared when I tried to post. I wonder if it pops up under another thread? [
]Anyway the gist was that LMI will cost you about $1100 +. Tax deductable over the 5 years but still seems a lot to pay instead of saving $3000.
Also saving that $3000 will give you increased equity which is also worth pursuing.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Hi Alf,[
]
Depends on which stategy you prefer.
Borrowing 90% gives you more leveragin to increase the rate of return,whilst borrowing less
gives you more security.
The amount of deposit can adjust cash flow to be pos or neg.
regards
Bryce Inglis
[email protected]
http://www.ipal.com.auI’ve heard plenty of people say that if you only borrow 80% then theoretically you can keep on borrowing forever.
Well, reality seems a little different. Even though you only PAY for mortgage insurance when you go over 80%, in fact mortgage insurance is obtained for most loans regardless of the LVR.
This means that at some point, even at 80% LVR, the mortgage insurer may still pull the pin and say they’re not going to insure any more loans.
There are now only 2 mortgage insurers in Australia, and I know from personal experience that this happens – it’s just happened to me. Apparently we are over exposed now.
So does anyone have any information on lenders (particularly non conforming lenders) that will lend at 80% and don’t get mortgage insurance?Keep smiling
FelicityHowdy,
I think it depends on the positive/negative gearing nature of the investments. Generally between the two major insurers PMI & GE you should be able to borrow up to about $1.5M as a low doc, higher on full documentation, providing your securities are sound. Lenders do prefer metro to regional, makes sense really as no. of potential buyers is always higher in metro areas, plus there are lenders who’ll take up to 100% of rental income into serviceability considerations in some circumstances. [
]As a strategy – if all you do is borrow 90% initially then pay down extra or renovate for example, with equity growth you’ll be able to revalue and end up under 80% in a lot of cases too. [^] Revaluation costs of $150-$250 are a small price to pay for eliminating the odd LMI payment of $1,500+. If your aim long term is to permanently remain at 90% across the board, that seems to be a bit harder for the lenders to cope with over the $1M+ lend mark.
If you need any help, like the other brokers I’d be pleased to oblige. [
] Whatever you do, don’t let lack of finances stop you in your tracks![
]
Mel
[email protected]
0438 548 235Felicity
2 good low docs without LMi include Adelaide Bank and ING bank, both up to 76% without LMI.
Others include ANZ and St george at 65% LVR.
I think it is agood strategy to get as much money as you can early on when it is easy, ie 95% if possible. Keep you cash for future properties. Then reduce you LVR as you go forward. changing to 80%, then 80% low docs without LMI etc.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry
Thanks for this information, very helpful!!
At least it shows me that there are products out there, finding out whether a loan is mortgage insured has been proving tricky!!Keep smiling
Felicity
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