Hi Wendy

Sounds like the bank is trying to cross collaterise your two properties – there's better ways of approaching this.

Personally, I don't view LMI as being a bad thing at all. It can be leveraged to grow the portfolio at a quicker rate.

I wrote this article for API magazine on the topic.

Cheers

Jamie

Personally – I wouldn't touch it.

The growth rates on these type of dwellings is very low.

Financing them can be a problem too – you'll need a decent size deposit.

Cheers

Jamie

Hi Michael

Thanks for the input.

To be honest – I think you've confused matters even more.

The original poster asked a pretty straight forward question –  if he'd be charged a break fee on his fixed loan (as indicated by his lender).

The answer is a fairly simple one.

Cheers

Jamie

Hiya Wisepearl

I'm not an accountant but I'd assume the purpose test would be applied when porting the loan to a new security. If the loan secures an IP and then ports over to secure another IP, then I can't see why the debt wouldn't remain deductible the entire time.

Is that what you mean?

Cheers

Jamie

I'm certainly no property spruiker and I'm all for a balanced argument….but the way I see it, if the stock market is looking grim and rates are dropping…..this should make property an attractive asset in the current environment.

Cheers

Jamie

In Australia, every application for credit is recorded on your individual credit file – irrespective of if it's been approved, declined or was simply a pre-approval.

If you pop into a few bank branches and they each lodge a pre-approval application, each app will result in a hit to your credit file.

If you have a fair bit of activity on your file within a short space of time, lenders (and mortgage insurers) will start to get nervous and question why you're shopping around so much – they'll usually suspect the worse and assume that you've been declined finance from all the other lenders you've applied for.

You need to find out which lender is right for you from the start – and then lodge the one application. When dealing with high LVR loans, it's important to get things right from the start.

Cheers

Jamie

Hi Coolra

Welcome aboard.

There's no right or wrong answer to your last question. It comes down to your own strategy and what you're aiming to acheive from property investing.

You could potentially spread that $50k over a couple of cheapish IPs – but how do these properties fit into your investment plans and what you aiming to achieve?

Gibbo and Richard make good points. It's all about using the right lender at the right time – which generally means using up the least generous first and keeping the more generous until last.  There's also the two main LMI providers in the background who we need to consider when putting you with each lender.

Going back to the type of property to purchase. I don't want to sway your decision either way – but I love properties that can do with simple, cost effective, cosmetic renos. It really isn't rocket science – you take an ugly place and pretty it up. Have it revalued afterwards – hopefully you've added a bit of equity that can be tapped into and you can repeat the process with IP 2.

Cheers

Jamie

Hi wade

Yep – and we need to charge a service fee for these sort of deals. As much as I love my job – I'm not prepared to do it for free

Cheers

Jamie

That's the point I was going to make.

If you're satisfied with your current PM – I wouldn't bother trying to "bargain" them down to save a few dollars in an effort to increase the rental yield a little.

If you tried to achieve every "property experts" advice in API or YIP magazines you'll go crazy. Everyone has a different opinion on what makes a good investment – you just need to work out what works for you.

Cheers

Jamie