The question as to where the RBA will halt increasing the cash rate is like asking how long is a piece fo string as dependant on so many facets of economic data.

Of course one way of not worrying about about future rate increases is to fix the rate of interest.

With regards to the supply and demand of the higher priced properties when interest rates are lower more people can afford a higher entry into the market but when prices increase affordability drops.

Zayne

LMI is calculated on the limit amount once the loan is approved even if you dont ever use it.

With some lenders it will be capitalised rather than deducted from the loan proceeds but is upto the individual lender.

James

I am not being funny but where did Terry or I make comment about using a separate lender.

Also what Post of yours has Kris not responded to.

I was under the impression it was he who posted the original post asking for some comment not the other way round.

Thinking of getting a third property as an IP and using a loan to fund the interest payments across 4 years as rental increases in current IP and future one would close the gap on my out of pockets plus will give enough negative gear to ensure I pay small amount of tax if at all.

There are many totally legal strategies to use it is just a matter of correctly structuring and funding the deals accordingly.

Totally agree with Terry the 2 loans should be standalone.

The disadvatages are numourous and rather than take time to list them do a search and you will see what Terry and I have written previously about such a strategy.

Your mortgage broker if he or she is investment orientated shoudl be able to explain to you the reasons why you dont want to X collateralise the securities.

Dont bother asking your Bank as they will have no idea as they will want to maximise their security by suggesting the course of action.

At its meeting today, the Board decided to increase the cash rate by 25 basis points to 7.25 per cent, effective 5 March 2008.

This adjustment was made in order to contain and reduce inflation over the medium term. Inflation was high in 2007, with an annual CPI increase of 3 per cent in the December quarter and underlying measures around 3½ per cent. Domestic demand grew at rates appreciably higher than the growth of the economy’s productive capacity over the year. Labour market conditions remained strong into early 2008 and reports of high capacity usage and shortages of suitable labour persist. Inflation is likely to remain relatively high in the short term, and will probably rise further in year?ended terms, before moderating next year in response to slower growth in demand.

The Board took account of events abroad and developments in financial markets. The world economy is slowing and it appears likely that global growth will be below trend in 2008. Recent trends in world commodity markets, however, have further strengthened prospects for Australia’s terms of trade.

Kris

Which lender allows you to borrow at a standalone LVR of 90% and avoid LMI / risk fee ?

Hi and welcome to the forum i hope you enjoy your time with us.

As Alistair has mentioned a securitsed lender mortgage insures every loan irrespective of the loan to value and also raises its funds from the the debt market rather than retail deposits. As such you will start to see the margins erode and their cost of funds get more expensive.

Remember what is cheap today can be extremely expensive in the long run.

Without additional information it is difficult to give you any practical advice however subject to serviceability and equity what you are trying to achieve isnt difficult.