All Topics / Finance / help on refinancing strategy

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  • Profile photo of prusliprusli
    Member
    @prusli
    Join Date: 2007
    Post Count: 31
    February 23, 2007 - 5:08 am

    Hi everyone,

    I am in the process of refinancing my existing loan and planning to buy 2 properties this year. Estimated cash required is $30K each = $60K total.

    Tables below show that I have to pay $7,868 if I want to get $14,532 ($55,532 – $41,000) extra cash = 54.14% cost/fund ratio.
    Part of me believes money is only good if it can help me achieve what I want. Another part is screaming wasting $8K on mortgage insurance just to get $15K extra cash.

    Should I be focusing more on creating wealth rather than minimising cost? besides I havent found the property to buy yet.
    It is hard enough to find one +ve cash flow property. I am thinking I’ll figure something out to buy the second property later.

    I would like to know whats your thought about this?

    Existing loan with Bank1

    Security value..$307,500
    LVR………………..80%
    Loan (a)…………$246,000

    New Finance…………………..Bank2………………………Bank1

    security value………………….$320,000…………………$320,000
    LVR…………………………………97%…………………………90%
    Loan (b)………………………….$310,400…………………$288,000
    Mortgage insurance (c)….$8,868……………………..$1,000
    Available fund (d = b-a-c) $55,532……………………$41,000
    cost/fund (c/d)…………………15.97%……………………2.44%

    Thanks.

    Profile photo of L.A AussieL.A Aussie
    Member
    @l.a-aussie
    Join Date: 2006
    Post Count: 1,488
    February 23, 2007 - 6:01 am

    Why don’t you look for an I.P that has a purchase price that will keep you under the LMI threshold, thus no LMI to pay?

    Cheers,
    Marc.
    [email protected]

    “we get sent lemons; it’s up to us to make lemonade”

    Profile photo of ShOw_Me_ThE_MoNeYShOw_Me_ThE_MoNeY
    Member
    @show_me_the_money
    Join Date: 2004
    Post Count: 80
    February 23, 2007 - 8:04 am

    Creating wealth is better then minimising costs, however you do need to do your numbers properly. Had it been me i would have :
    1. either look for a property under the LMI threshhold or
    2. save up 8K or might even take a 8K personal loan on my CC to get the property and pay the CC with a low rate balance transfer getting anoter CC

    I’d go for option 1 if i am absolutely sure about the returns from the investment

    Profile photo of prusliprusli
    Member
    @prusli
    Join Date: 2007
    Post Count: 31
    February 23, 2007 - 8:05 am

    thanks Marc,

    After reading Steve’s book and many others I want to add +ve IPs in my portfolio.
    Sit around and do nothing will drive me crazy :)

    Right now I dont have enough for deposit. The only way is to increase my existing loan to get me started.
    It would take me a year or two to come up with the same amount of money.

    I am happy as long as my portfolio LVR is between 80%-90%.

    Cheers

    Profile photo of nadiaznadiaz
    Member
    @nadiaz
    Join Date: 2007
    Post Count: 13
    February 23, 2007 - 8:47 am

    sorry to bud in but im lost and trying to find my way i wanted to ask some questions but im getting no where

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    February 23, 2007 - 9:23 am

    Hi Nadiaz

    No problems type your question and we can all answer it for you.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner. Ph: 07 3720 1888
    [email protected]
    New 100% Shared Equity scheme coming soon – Email us for details.

    Richard Taylor | Australia's leading private lender

Viewing 6 posts - 1 through 6 (of 6 total)

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