Hey guys! I’m sort of new in this whole area of Investing In Property, and i’m learning heaps, however I’m really confused about the different types of loans and the finance side of things!
For example if I was to buy a unit/appartment for $250,000 would I look at depositing 10%, were I would need to take out Lenders Mortgage Insurance or would I save up for a 20% deposit to avoid this? I would then look at the Interest Only Loan.
I don’t own a property and using my parents equity isnt an option so I cant use equity to borrow 100% of the purchase price.
I have also looked at the No Deposit Home Loan but it does state that you need to have a clean credit history and strong income!
Any other recommendations? I havnt spoken to a broker as yet.
Your help would be really really appreciated!
thanks in advance
I have saved about $33,000.
Argie:
4For a loan over 80% LVR, insurance is needed, some lender 2offers 85%.
1So, 20%(15%) deposit is a must to avoid mortgage insurance, 4but the insurance can be borrowed to add up to your 3loan.Difference is a little bit more repayment, interest only is also 1possible.
0clean credit history is always a must if you want a normal rate 5and HIGH LVR. Income is OK as long as you can service your 2laon.
If you arwe first home buyer, a grant is available for settlement.
Your saving enable you to buy a 250k property without insurance (fhog factored in).
Hope it helps
Tommy
Argie
Loans vary from lender to lender and so does the costs of mortgage insurance.
Each lender has a different scale and you will suprised as to the savings with certain lenders.
I guess mortgage insurance is the economic cost of doing business. You can borrow >80% now and cop the premium and get out of the rent race or save and save until you have 20% and prey that prices havent gone up in the meantime.
Just shop around for not only the right loan but also the right mortgage insurance premium.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Well said Richard. I would also suggest if you are in the Lower LVR Bracket and closer to the 80% mark then you are to the 90% that you ask yes, ask your lender to negotiate the terms under which you pay LMI. Some will negotiate and allow a flex in the rules if for example you asked them for 85% no LMI for a 5 year period at which time it is Re-valued and if the LVR is not 80% or less then you pay the balance or the premium.
Don’t just take the first thing that is offered…
Stuart Milne
Non-Conforming Specialist
READY Mortgages
http://www.readymortgages.com.au
[email protected]
Mob: 0404 056 055thanks guys for all your valuable advice!
Hi All,
I have a question to add.
I understand what the basic meaning of an interest-only loan means but what do you recommend for someone who is looking to grow their property portfolio? Do the banks prefer us to try and pay some of the loan off eventually or are they happy for us to just sit there for 10 years paying interest only.
For example if someone owns 20 properties ,are they all on interest only loans? I know it is good to try and reduce loans to therefore pay less interest but wouldnt you be better served to use positive cash flow in better ways than to reduce the loan on a property?Thanks for taking the time to read my query. [party]
ogilvy
Interest only loans have a couple of obvious benefits:
1) For serviceability reasons the monthly repayment is lower than it would be on a P & I basis and therefore you will find that you will be able to borrow more.
2) With an interest only loan the debt remains constant and therefore the amount you can negatively gear will also remain constant. With a P & I loan of course the amount of interest you are charged dimishes as the debt gets smaller.In saying all of this if you are wanting to get to a stage whereby you own the properties unencumbered and the rents replace your salary you will need to start to repay some of the debt back by making P & I repayments. Easiest thing to do is split your loan, utilise an offset A/c and work down the principal.
It is all a matter of personal opinion.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
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