Hi all
I am currently organising finance for a house and land package in WA (Mandurah area).This is a no doc loan and will be 70%LVR to avoid mortgage insurance.
The block has doubled in value, however my broker has stated that worst case scenario the lender will value the block at purchase price ($165,000, sales figures are around $290,000+)
This does not seem logical and I am not particularly happy if this happens. Is this unusual, can anyone shed any light.
I have not used no doc before, mostly use lo doc.
Cheers, Marisa
(Hard work never killed anyone, buy hey why take a chance)
Marisa
Your broker is correct. Most lenders will only lend against purchase price / valuation whichever is the lower.
There are a few lenders who will advance against valuation but not on a Nodoc basis. You may also find that the exist fees on a Nodoc deal are quiet high and therefore refinancing down the track may not be an option.
Is there any reason why you can’t go lodoc this time to increase your LVR.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi Richard
My broker is concerned about my exposure as far as morgage insurance goes.I started off with Resi H/L (lo doc) about 5 years ago using my PPROP and with this lender accessed close to $700,000. She feels that we need to watch this. What are your thoughts.
I recently changed brokers so I am not sure what to make of all this yet.
Also, I mentioned paying for the block firstly and then getting it revalued using recent sales data. She stated this still may come in at same value $165,000.
One positive is that I would need $30,000 to complete home, ie carpets, aircon etc. and she has advised that if I provide quotes/receipts the lender will extend finance for this.
Thanks for the tip on exit fees, I will be asking my broker about this today.
I appreciate your advice.
Thank you.
(Hard work never killed anyone, buy hey why take a chance)
Hi Marissa
Without further information it is difficult to make an assessment on your LMI exposure.
In saying this both the main MI’s will go well over a Million each so that gives you 2 Million of borrowing on the basis that you have sufficient income to service.
Some lenders will go to 76% without LMI anyway so that avoids that and interest rates are less than the Standard variable Rate.
Nodoc can still be a problem with a securitised lender dependant on with whom you current loans are insured.
Just be careful as it can be an expensive exercise to unravel if your MB is not upto scratch on Lodoc / Nodoc lending.
Many Lodoc lenders will allow you to revalue after a few months to increase your borrowing.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi Richard
I did speak to my broker this morning and depending on what the block value comes in at – I may look at purchasing the block outright (70% LVR).
She stated that once the building contract is signed then they could revalue block. I may then have a possibility of the block coming in at higher value??
When I meet up with her again I will have a long chat about LMI as I find this issue confusing.
I’ll keep u posted.
Thanks again.
(Hard work never killed anyone, buy hey why take a chance)
No problems keep us informed.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Geez Marisa, You’ll have your own Suburb down there soon if you keep going at this rate :o)
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsHi Redwing
I dont think I will be doing much more in Mandurah for a while just too expensive. Damn investors.I am actually looking for blocks around inner city areas and its surprising but I think I have discovered a couple of pockets that represent better value than new developments.
Cheers, Marisa
(Hard work never killed anyone, buy hey why take a chance)
Originally posted by Qlds007:In saying this both the main MI’s will go well over a Million each so that gives you 2 Million of borrowing on the basis that you have sufficient income to service.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Just to clarify Richard, as far as I am aware, you may still me MI’d even if you got a 70 or 80% no-doc/low doc loan IF you went through a securitised lender. So it seems this limit is still in the $1M / MI mark. Is there not another MI in the market?
Hence wouldn’t a prudent strategy be to go to the Big 4, Suncorp, St George, Bank West to get the 70%, 80% full doc then no-doc loans where theres no MI attached to these loans? Only when this “avenue” is exhausted do you start with the securitised lenders such as Resi, Macquarie, Rams, non-prime lenders..etc.. and you don’t care if you went 90-95% LVR as your credit file will show MI against those loans anyway. The extra 1% LMI is probably worth paying for the capital you save. By then you could accumulate $4M worth of debt so won’t care if you never buy anything else.
Asdf
You are right i recommend all of my clients go full doc when and where they can until such time as their capacity to show serviceability is exhausted.
Only at this stage would you consider a Lodoc / Nodoc loan.
Certain lenders allow 76% lodoc without LMI and this is always an option initially but some time to keep on borrowing you need to consider alternatives.
One mistake new players make is that they declare and income on a lodoc application and then some time later make a Nodoc application with a lender who uses the same Mortgage Insurer.
The MI looks at the previous lodoc application and calculates that the client is unable to service the borrowing even though it is a Nodoc. The loan is then declined.
There are 2/3 main insurers in this market with a couple of other fringe self owned players.
In choosing your initial lender bear in mind that some time in the future it may be advantageous to use one of the mainstream lenders for lodoc rather than a securitised lender.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
hi am a mortgage broker , for investment i would suggest going to low dow rather than 70% no doc if you can as you not using as much of your money if you do 80% which gives more leverage for further investing and the mortgage insuran[exhappy]ce is tax deductable any way.
sdav
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