All Topics / Legal & Accounting / Need help – property investment and mortgage insurance

Viewing 5 posts - 1 through 5 (of 5 total)
  • Profile photo of vsdabhivsdabhi
    Member
    @vsdabhi
    Join Date: 2009
    Post Count: 19
    September 24, 2009 - 5:21 am

    Hi,
    I have 2 properties and I want to buy a third property, which is an old property, I need to spend about $20K before I rent it out.
    If I have 20% equity for my third property, I will not have to pay for Mortgage Insurance but unfortunately I have not enough equity from my 2 houses so bank asked me for morgage insurance. It will cost me $16K.

    My question is Can I get any tax benefit on mortgage insurance?. That insurance will apply on all three properties.
    Thanks
    Vinod

    Profile photo of KRH83KRH83
    Participant
    @krh83
    Join Date: 2008
    Post Count: 47
    September 24, 2009 - 5:44 am

    Hi Vinod,

    i'm not an expert but when i saw my accountant about purchasing my second IP, he informed me that the LMI can attract a tax benefit but over a certain time period. i think he called it annualised?? i haven't got all the terms down yet!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    September 24, 2009 - 7:12 am

    Hi Vinod

    Yes if the mortgage insurance is charged as a result of an application for an investment loan then it is considered as a loan cost and can be claimed over 5 years or the term of the loan whichever is shorter.

    I would not be keeping all 3 loans with the same lender if LMI is required as the premiums rise as the loan amount increase.
    The threshold for LMI is < 300K / 300k > to 500K / and over $500K.

    If you have a couple of properties I am guessing you are in the higher category.

    Different lenders and different mortgage insurers charge different premiums so get your broker to shop around.

    Might be an idea to take a 95% LVR on one loan and say 90% on the other all depends on the numbers.

    Richard Taylor | Australia's leading private lender

    Profile photo of hydramaxhydramax
    Participant
    @hydramax
    Join Date: 2009
    Post Count: 47
    September 28, 2009 - 12:15 pm

    Richard makes a great point about LMI thresholds and the need to spread your lenders.Well done!!

    Hydra

    Profile photo of vsdabhivsdabhi
    Member
    @vsdabhi
    Join Date: 2009
    Post Count: 19
    November 4, 2009 - 4:04 am

    Hi, 
    LS007 and hydramax.
    Thanks a lot for saving me over $10K. I can not understand how could my mortgage broker missed the idea of have more than one lenders. First broker was from ANZ so he did not tell me about other options, I understand it. But second one from mortgage solutions also missed that option. Then I asked another one to do what you suggested. Now I have 3 lenders and 4 properties. LMI only 5K on 2 properties. Thanks a lot. This forum is very useful to new investors.

Viewing 5 posts - 1 through 5 (of 5 total)

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