Hi All
I know this is an investing forum but we are currently looking at buying our first home (PPOR) with the view of the future to one day turn it into an IP or use equity in it to begin investing.
We have tried to get finance pre-approval with our bank of 10 years, NSW Teachers Credit Union. The product was a My First Home Loan which was a 7.49% variable rate, had good features (offset, redraw, weekly repayments) and with pretty much no fees at all (apart from deferred est. fee if you break in 3 yrs etc). Teachers Credit union max LVR is 85% without LMI or 100% with LMI.
Anyways the pre-approval we were looking for is only $185,000, us providing a deposit of $8,000 in savings plus $7,000 FHOG totalling 15,000 deposit. (so the max. purchase price of a property we were looking at was $200,000)
So with those sums we'd be looking at 7.5% equity and 92.5% LVR, so we required LMI. The TCU preapproved us fine for the amount based on our income etc pending approval of LMI (at first they said we could borrow well over 400k), but as they had to submit our application to their LMI company, the LMI company declined to provide insurance on our mortgage due to 2 reasons:
1. Instability of employment (both my wife and I have only been in our current jobs for 6 months, we have both got a steady work history prior to that though, I am in Admin field and she is in Finance/Admin field). TCU said that the LMI co. want at least 12 months in your current position to prove your stable.
2. The location we want to buy in doesn't come in the LMI zoning area. The area we are looking at is a small village with a population of around 450 people, located 60km from Canberra City Centre, called Captains Flat (NSW 2623).
The TCU said they would be able to reassess our application if we could come up with 20% deposit to avoid LMI (their standard 15% deposit avoids LMI, but due to the size of the town it would have to be 20% deposit to avoid LMI). Unfortunately given we only have $8000 in savings and the FHOG, we can't come up with an extra $22,000.
Is there any way we can get around this? Will every other lender (be it a bank, credit union or other) require mortgage insurance, and when it gets to the stage of checking if the insurerers will insure the lender for our mortgage, every time it is going to get declined based on the area (we would rather not change the area) etc? Or is it possible some other LMI companies have more easygoing policies?
Anyone have any suggestions on where to go from here? Apart from waiting a few more years to save another 22k. I'd like to avoid low/doc type products if we can. My parents would probably lend us the extra we need to get the property without insurance or be a guarantor or something, but I'd rather not use that option (better to do it on our own) due to it increasing our repayments a lot having to pay back two loans (as they would probably want the money back within a few years).
Is there any specific lenders or mortgage brokers I should try? Thanks so much all.
Hi
The best possible solution for you may be to use your parents – if they have equity in their home to help you. The entire loan will be payable by you, you only use 20% of the equity in your parents home to satsfy the LMI rule and your parents do not pay towards the loan at all.If you need any further details email me at [email protected] and I will assit wherever possible.
Hi there
AT an 92.5% LVR most lenders will either want to mortgage insure the loan or charge a risk fee to cover their exposure.
I am unaware of with whom the Credit Union are using for their MI cover but not every lender would have the same problems.
Checking the post code it appears acceptable with the right lender.Richard Taylor | Australia's leading private lender
Qlds007 wrote:Checking the post code it appears acceptable with the right lender.Hi there,
thanks for your help, should I be trying a mortgage broker now to try & find if there is anyone willing to lend me the $$, can brokers get you pre-approval from their lenders or to get pre-approval do you need to go direct to a lender?
or should I just try and find a different lender and apply for pre-approval? (do most charge a fee for this or do it for free?)
Interesting what you say about the parents thing cheraul, my parents fully own their own home outright, but they may be looking at selling it within the next two years. Does this affect it?
Does this mean that the lender would put a hold on 20% of their home, or say if I purchased for 180k, put 15k towards but needed 21k to make the LVR 80%, or would they just value my parents house, and say if it was worth 200k, they would just have a 10.5% hold on their house to match the 21k short I was rather than 20%?
I think my parents would be reluctant to put their house up as security incase we missed a payment could they lose their house (they dont like risk & i dont think they love me that much!!)? They'd have the money to bail out of the 21k stake they guaranteed if we defaulted (which it wont) if that is the way it works?
any idea of companies or further info on this type of approach?
thanks again for ur helps:)
Hi there
Yes most brokers including moi have a range of lenders who could accomadate your request and certainly in my situation we dont charge for anything for any of our residential services.
There are a variety of Family Guarantee loans all with a slightly different spin on the product details.
In a nutshell if your parent wish to sell down the track the loan will need to be reduced to either 80% of the current valuation of your property or incur mortgage insurance at the time if the LVR is > 80%.
Shoot me an email if you want some more details on loan options.
Richard Taylor | Australia's leading private lender
There are 2 major LMI companies. It looks like one doesn't like that area, so you need to find a lender that uses the other LMI company which can do the area. Going to a lender direct, you wouldn't know who they use for LMI, so you could be wasting your time. That is one reason to use a knowledgeabe broker like Richard.
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
Hi,
I agree with Terryw and it sounds like Richard could have a lender that would be able to help you with your endeavours.
Should you encounter any further problems, I have a couple of lenders that are able to to to the 95% LVR in your area and LMI is the same.
Good Luck
Sharlene
[email protected]Hi Guys
thanks for your help, ive given up on that area as I dont think the resale values/growth is good enough to warrant a purchase.
I spoke with the teachers credit union and they told me the LMI company they use is GenWorth. They said they pretty much wont insure a mortgage unless the town has over 2,500 population. We are looking at small villages because they offer slightly cheaper purchase prices than Canberra, rural atmosphere, and they are within commutable distance to travel to work each day. I've resubmitted another application for a different village/town but I have a feeling the same thing is going to happen, can anyone tell me if this town looks any better from a mortgage insurance point of view?
Collector, NSW, Postcode 2581 on federal Hwy, 35km from Goulburn (popn of 20000) and 53km from Canberra City – e.g. a 3 brm house on about 1400m2 block of land..
or, Gunning NSW Postcode again 2581 on Hume hwy, 45km from Goulburn, and 66km from Canberra City. Similar type of house and block size.
If GenWorth doesnt touch any of these little villages, can any one give me an idea of what lender uses a company thats different to GenWorth? What is the other main LMI company?
We'd be looking now at a purchase price of about 230k, with 15k deposit (8k saving 7k fhog) so LVR of approx 93.5%.
Btw still only trying to obtain Pre-approval, even if i get preapproval for that amount, is there a chance they are going to re-assess it once i find the 'dream property' within that price range & then decline it so im back to square one? Or is the whole point of preapproval so they cant do that??Thanks everyone
If its still no good I will see if richard or a broker can help me find a lender willing to lend on this.From their website Post Code 2581 appear to be acceptable to Gemworth upto $300K.
Richard Taylor | Australia's leading private lender
Interesting to know, incidently i just did a search for the previous area (captains flat 2623) and it says the same thing as when i search the new postcode 2581, 300k to 95% LVR and yet they knocked it back…hmm, odd how all this works..
I wonder if the 'instability of employment' issue will still cause a problem for us if they give the go ahead to the area. i thought lenders these days didnt mind if you job hopped a bit (e.g. due to moving to different cities etc) provided you didnt have any long gaps of unemployment..i woulda thought 6months in the same job and being permanent would be enough for them, these LMI companies seem quite strict..will wait and see what happens with my fingers crossed
thanks again richard.
Gemworth have really tightened up so using a lender through PMI maybe the solution.
Richard Taylor | Australia's leading private lender
Ahh ok, are you able to give me an idea of some lenders with a rate around 7.5% (if it exist anymore) which use PMI?
or should i email you to discuss further?
cheers
If rate is the only thing you are after then I am sure we can find someone.
Drop us a line and i would be happy to help.
Richard Taylor | Australia's leading private lender
If its still no good I will see if richard or a broker can help me find a lender willing to lend on this.You must be logged in to reply to this topic. If you don't have an account, you can register here.
