Hi All
I’m in a bit of a situation trying to close a deal, and I think my bank is being unreasonable.
My current lender BankSA has a guideline of LVR being > 80% requiring Lenders Mortgage Insurance (LMI).
I have the following things:
Block of land – fully owned – value $200,000.
Block of land – paid $270,000. – value presumably still $270,000. Owe $282,000.Now we are just about to purchase a house worth $485,000 with a total loan of $510,000.
The total value of our properties then stands at $955,000.
The loans will total $792,000.
This gives an LVR of 82.9% (these properties are cross-securitised).
I also have my own home loan with them of $342,000. I am not going to access my equity in this as it is already at around 75%.
The bank is being unreasonable I believe by not budging on mortgage insurance despite me having $1mil+ of property loans with them, all my company bank accounts with them, and the purchasers combined incomes are over $200,000 and my wife also earns a good income (I am investing with my father).
I need to find (settlement is on the 15th of Sep!) quickly, a bank with good rates who will accept our 83% LVR without requiring mortgage insurance – I am not willing to accept I have to pay $6,500 in money for nothing. I know its deductible, but I think I can do better. Anyone have any ideas? Westpac and a local broker have been unable to help so far. Westpac WOULD have done the deal except that one of the blocks is in what is considered a ‘country area’ even though it is only a short drive from the other block which is considered in a metro area.
I may have to bend over and take this LMI but I would feel better knowing I tried to get out of it!
Thanks in advance guys.
Adam
It doesnt matter if you have over million dollars with one lender, it all comes down to how much you earn and the value of the properties used for security. It is a pain, even if its off by 1% on the LVR, the loan will get declined, and sometimes when purchasing a house, the valuation comes in lower then the purchase price. What we do? We get over it, and deal with the problem, and it can cause the client to lose his house but we will make sure there is no other possibilties without not proceeding anymore.
You could access just over $20,000 with your current property… you could go to 80% of the value of the property if its Full Doc Loan so no LMI is applicable….going over 80% is really limiting your options in regards to LMI.. i cant think at the moment, ill give it some thought and get back to you, unless someone already knows a solution straight up.
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieHomeside may also consider slightly over with no LMI.
A cheaper way to go with your existing lender may be to gear up to 80% on everything, and then go over 80% on the new purchase, that way you are only paying LMI on the smaller loan (not total loans) and your loans would be not cross collateralised. You could also possibly challenge a valuation as coming in low??
But you haven’t got much time left either.
You may also have problems with valuations coming in lower with a new lender too.
Terryw
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Parramatta
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I believe westpac have just released 85% LVR with no LMI a few weeks ago…
somthing to look into.
Investor Finance
[email protected]Westpac couldnt do the loan as one of his property is in a country region as stated in the post…cutting it close with time aswell. When LMI is applied, lenders get very strict on where to lend and where the security is situated.
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieYes Westpac have agreed to look at deals at 85% LVR without LMI but in saying that have a real close look at the rest of the terms. Both NAB and Homeside have waived LMI for me recently but the deals were not the queickest to go through.
As Terry mentions you are cutting it fine to settle by the 15th September espeically as you are requiring 3 new valuations.
I personally would be looking to switch one of the loans to say 90% LVR and pay the LMI and then access the balance of the money to use as future deposits etc. By having one of the loans with a separate lender the LMI will only be charged on that loan amount Get your broker to shop around as LMI rates vary considerably from lender to lender.
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Richard Taylor
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The settlement date can probably be extended (its a DHA property and they have been very flexible) if I can find a solution to this issue.
Unconditional contracts have not been exchanged yet.
Sorry to post again.
As mentioned previously Westpac said no go and the phone monkey wouldn’t even pass me on to a senior lender to assess it. I said ‘so I can forget Westpac for my business then?’ and he agreed.
We can’t gear up any of the others. The only one available for that is the paid off block of land. This would be taking money from a deductible investment (the new property that has a 6 year rental agreement) to a non deductible one (vacant land).
Its a complex situation, but I seriously thought there would be a creative broker out there who could resolve this. I’m really surprise lenders are so apathetic to gaining $1mil of new business + they can probably persuade me to bring my company accounts over.
Adam
any problems accessing the equity in your current property, one thats at 75%?
Is this a Full Document Loan or a Low Document?
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieOriginally posted by adamw:Sorry to post again.
We can’t gear up any of the others. The only one available for that is the paid off block of land. This would be taking money from a deductible investment (the new property that has a 6 year rental agreement) to a non deductible one (vacant land).
Why can’t you gear up? Is it because of the location? That would be the quickest option.
And I am not sure what you mean above??? Deductibility does not depend on the security, but what the funds are used for.
It is not a complex situation, but a simple one. There are a few lenders out that that will let you go over 80% slightly. If you haven’t tried them, then that is a possible solution.
Another solution is to gear one up high, and keep the others at 80% to reduce the LMI.
Terryw
Discover Home Loans
Parramatta
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Originally posted by Terryw:
There are a few lenders out that that will let you go over 80% slightly. If you haven’t tried them, then that is a possible solution.This is exactly what I have been looking for with this thread. Can someone name these lenders?
This is a full doc loan.
Originally posted by adamw:We can’t gear up any of the others. The only one available for that is the paid off block of land. This would be taking money from a deductible investment (the new property that has a 6 year rental agreement) to a non deductible one (vacant land).
I realise I am repeating Terry’s pick up – but this could be the solution to your ‘problem’.
If you use the land as security for a equity loan which then funds deposit, purchasing costs. LMI etc then these funds become deductible.
I may have missed the meaning of the comment but there could be room to move at this point.
Derek
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The Investors Club http://www.monopoly.tic.com.au
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Skype – derekjones2113Originally posted by adamw:Originally posted by Terryw:
There are a few lenders out that that will let you go over 80% slightly. If you haven’t tried them, then that is a possible solution.This is exactly what I have been looking for with this thread. Can someone name these lenders?
This is a full doc loan.
I already did, and I think Richard did too: Homeside.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
[/quote]
This is exactly what I have been looking for with this thread. Can someone name these lenders?
This is a full doc loan.
[/quote]Hi adam ,
i am a full time investor and can highly reccommend this broker, call Mike Wood on 0409146817, he does loans in WA and all across Australia, he will be able to fix your problem but i doubt he will settle it in time as you will have to pay out lenders and they love retaining their loans
cheers
tony
Wholesale Property Brokers
http://www.wpb.com.au
Australia*Hong Kong*Singapore*India*Malaysia
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