Forum Replies Created
Hi Cass
What sort of purchase price are you looking at.
With the Grant being what it is depending on the purchase price you maybe ok.
A couple of products out there that will do 95% plus LMI with no genuine savings requirement.
Richard Taylor | Australia's leading private lender
bjs
Yes you are correct as long as there is no relationship between you and the tenant (cant be a Trustee of the SMSF or related party) then you should be fine.
In saying this you have to consider the following:
1) A SMSF cannot borrow in its own right so it is done through an Instalment Warrant by utilising a Bare Trust. A Corporate Trustee is required. As such each property you purchase and finance you will need a separate Trust and Pty Ltd Company so the costs of establishment start to mount.
In addition on average most lenders will charge upto a couple of thousand dollars for their own legal fees to assess the Trust Deed.
2) Limited to circa 70% of purchase and in most cases interest rates are higher as the loan is considered Commercial albeit processed at suido residential rates.
3) The asset must be self servicing so you cannot rely on other income within the fund to support the borrowings. Obviously the SMSF has to fund the shortfall such as Rates, Insurance etc.
I have finance half a dozen or so and lenders require so much paperwork it is not funny.
Richard Taylor | Australia's leading private lender
Welcome to the forum Josh and I hope you enjoy your time with us.
Richard Taylor | Australia's leading private lender
NAC
They are wrong. If they argue switch lenders.
Richard Taylor | Australia's leading private lender
Hi Val
If you dont need to pay LMI then dont however i would never use any of my own cash as a deposit.
I think if you structure the loan properly you could borrow 80% against the new IP and a Line of credit against the PPOR stick your cash funds in a 100% offset and get the best of all worlds.
This could be the launching pad for additional IP acqusitions.
Richard Taylor | Australia's leading private lender
No kyla
That is the way to structure it.
If you stay with the 1 lender and amount is over $500K then your LMI premium will really start to rise.
Richard Taylor | Australia's leading private lender
Where Jaffa when you need.
Unfortunately off travelling looking at properties but i am sure he will be back to clean up this advertising shortly.
Richard Taylor | Australia's leading private lender
Hi noisuf
1) Purchased a place for $600K where I will be renting it out for minimum 5 years before I'll move there through rebuild or extension. Ok with that noted need to make sure you structure it properly.
2) Had pre-approval from ANZ for $600K prior to making offer. I will be paying stamp duty out of my own $170K funds (offset in current home loan).
3) I already have a loan with the ANZ for the house am living in for at least next 5 years (becomes IP after), $180K remaining, house valued at $450K. It's a package where I get 0.7% discount off variable with no fees whatsoever. I'm expecting if I went the full variable option, I would get get at least 0.8% discount. Would assume this is interest only if not it should be only the interest on balance on the day you move out will be Tax deductible.
4) Due to the equity in my existing home, I can borrow $600K without having to pay mortgage insurance…IF…I go with the ANZ for this new loan. This would be the same with anyone due to the lvr.
5) If I had the choice, I would like to go with another institution to diversify loans, especially if you guys say go full fixed option for 5 years…as there is a big difference between ANZ's and NAB's rates for example. However, NAB will not be recognising the equity in my current house so I will not be able to borrow $600K from them (they said I could borrow up to that amount) due to LVR. The will recongise the equity in your home but you would never structure the loan by borrowing 100% of the purchase price secured against both properties anyway. Cross collateralising the loans is inviting problems down the track.
6) Have good experience negotiating variable loans in the past. Have no idea about what to ask or expect for fixed or split loans as they vary so greatly between institutions. Think them days are gone. You wont get more than 0.7% out of Anz as the loan isnt big enough. Anz dont discount on their fixed rates but other do.
Richard Taylor | Australia's leading private lender
Almost nil chance of financing over a mid lvr.
Richard Taylor | Australia's leading private lender
Lisa
It is not a matter of not being honest with the lender as I assure you they will find it is merely a matter of structuring the loan correctly from day and then sticking to the structure.
Your summary is about right.
Richard Taylor | Australia's leading private lender
Raj
As we discussed you wont be able to buy the land in 8 individual names as the properties wont have individual titles until completion of the project.
Unit Trust would be a suitable entity to consider.
Due to the size of the project it will be consider as a Development project with the terms, fees and charges that go with this.
Richard Taylor | Australia's leading private lender
Hi Jenny
Yes it all depends on the mortgage insurer, the lender and the location and zoning.
Normally much under a population of 5000 and you might struggle at the higher lvr.
Wont find any lender waive LMI in the small regional areas where the loan is over 80%.
Would need more hard data to advise you further.
Richard Taylor | Australia's leading private lender
Lisa
It is becoming harder and harder with The Dragon being owned by Westpac who also own RAMS.
CBA owning Bank West and a 30% stake in Aussie Home loans.
NAB buying out Challenger during the week.
Yesterday WLMI withdrew providing cover on all of their high risk mortgage insured loans for Westpac and passed these deals to Gemworth who are known for their rigarous underwriting.
The list goes on and on.
Richard Taylor | Australia's leading private lender
Thanks Terry did say it was a fair few years ago lol
Richard Taylor | Australia's leading private lender
Thats the one $10K PA but i think you might want to check the maximum over a 3 year period.
Havent got the figure to hand but did a calculation for a client only a week or so ago and their is a capping over a 3 year period.
Richard Taylor | Australia's leading private lender
Still problem comes when the land value is less than the current loan amount and GR lending isnt available.
Richard Taylor | Australia's leading private lender
Grrrr sorry to say Helen but Yes.
Of course without all of the numbers it is difficult to be exact but if it is over 80% LVR then no chance.
Richard Taylor | Australia's leading private lender
Hi Mccrills
Where are you looking at purchasing and what sort of price range?
Richard Taylor | Australia's leading private lender
Hi Pinwheel
I can think of numerous issues with this strategy which would include:
1) Unless one of the Directors is a Registered Builder or you intend to Contract the work out to one you are going to be treated as Owner Builders and this may not even be possible depending on which State you are in.
Either way on a financing perspective forget it.2) If you have little equity left now as soon as you knock the house down youa re going to be down to land valuation only.
Might find at this stage the land is worth less than the loan amount. Most traditional lenders do not offer gross Realisation loans so this is an issue.3) Carrying on from 2) above unlikely to get more than say 65% loan to valuation so you will need either to kick in equity or cash to get the project numers to stack up.
Few others but i think you get the point.
Richard Taylor | Australia's leading private lender
Hi Jean
Without being funny any LTO Contract you draw up the Seller is going to want his Solicitor to redo it.
Better of finding the property and a co-operative seller first rather than working backwards.
Richard Taylor | Australia's leading private lender
