Just wondering if anyone has considered paying hefty mortage insurance to enable them to keep investing, or if any of the brokers have words of wisdom?
We are pretty much at the end of our current available equity, but would like to continue investing sooner rather than later. We are considering paying MI to enable us to unlock a further $475K which could allow us to access up to another $1.8m (our figures could be a bit off?)Our problem is that we got the wrong advise when we started out and all our loans/properties are cross collateralised, which we now realise is a big disadvantage. Part of the problem was we never anticipated buying so many IP’s so quickly, and I guess the broker who started us out didn’t know that either. Anyway, the end result as far as we can determine is that we would be upfor about $50k in MI to access the above.
First thoughts – FORGET IT!!
Second thoughts – think of what we could acheieve with the extra equity.Has anyone been down this path?
Wake
Hi Wake,
I would strongly suggest that you do have a chat to another broker (or 2) and see what they say. I don’t mind limited cross collateralisation but from the sounds of it you are ‘crossed’ to the eyeballs – as such it may even be a case of one step backwards to go forwards again.
But in answer to your initial enquiry regarding LMI or not. We initially used LMI to stretch our equity as far as possible when we got serious about investing. Since then we haven’t needed to and have equity to spare hence we have steered clear of LMI for our most recent purchases.
To me the critical issue revolves around the cross collateralisation and I would address this first and then consider the next move.
By way of interest LMI is a tax deductible expense and is deducted over 5 years or the life of the loan – whichever is shortest.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks for that Derek.
We have spoken to two brokers who have advised that we would be worse off by refinancing at this stage as quite a few of our loans are low IO ones. Quite a few will “mature” around the same period, so we have been advised that might be a better time to refinance.
I will seek further opinions from brokers, as suggested.
Our thoughts were to access as much equity as we could via a LOC and obtain future finance elsewhere with the CORRECT structures this time.
Wake
There are only two LMI companies which makes it hard. Both have certain requirements for maximum exposure levels per client, meaning they will only approve lends up to a certain total amount per borrower. This does not matter which bank you go with, all adds to the total. Offhand, I don’t know what the limits are for full docs, but for low docs they are $800,000 for PMI and $750,000 for GE. So this will limit the number of loans you can get that are mortgage insured. And watch out, most of the small lenders have all of their loans mortgage insured no matter what the LVR (Macquarie, RAMs etc).
You may be better off just refinancing a few properties at a time. If they are cross securitised, you can apply for a release of security with the current lender, and then refinance that property with another lender. The remaining security will have to be valued enough to support the remaining loans with the origianl bank.
It shouldn’t be a problem refinancing IO loans, maybe you meant they were fixed? If so, you could have large exit fees, and it maybe better to wait.
Terryw
Discover Home Loans
Mortgage Broker
[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
Originally posted by Wake:We have spoken to two brokers who have advised that we would be worse off by refinancing at this stage as quite a few of our loans are low IO ones. Quite a few will “mature” around the same period, so we have been advised that might be a better time to refinance.
Must be good brokers – unscrupulous ones would try to convice you that now is the best time to refinance through them [biggrin]
Well done,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Todays Hot Rate
***3 year fixed – 6.49%***Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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