An associate is purchasing a business (leasehold going concern) which will be fully securitised by property (unencumbered). He has been knocked back by the mortgage insurers twice as the security is insufficient/inadequate. Business loan is to be a personal loan secured with an 80% mortgage over the property.
Why would he require mortgage insurance when 80% of the property equates to the full value of the loan?
Would putting up cash into the purchase negate the need for LMI?
Why is he required to have LMI in any case if there is adequate security in the property excluding the 20% which they are not using?
SNM
If it is a Personal loan then why are mortgage insurers involved.
Sounds like there is more to meet the eye on this one that first seems. Has he been rejected by both of the main MI companies.
If the loan has been placed with a securitised lender then LMI is applicable even if the LVR is 50%.
Sounds to me like the Broker has no idea on what he is doing.
Has it been done Lodoc or can he support the borrowing.
Richard Taylor | Australia's leading private lender
From my discussions with my associate, I established that he is taking out the loan as a personal loan so as to get a better interest rate than on a commmercial/business loan.
The broker is dealing thru ANZ however I don't know the particulars of the MI, apparently there is some issue with regards to the guarantor (the MI has given specific directions twice in this regard and rejected twice).
He tells me this is a low doc deal however they would have sufficient income to support the loan (not 100% sure of how he structures his employment whether it is thru his family company or direct with the employer).
SNM
I think there must be more to this than meets the eye.
Me thinks it is more in the presentation than the fact.Maybe the declared to the Bank that the funds where to be used for a specific purpose which they didnt like.
All in all it shouldnt have been declined.
Richard Taylor | Australia's leading private lender
The issue seems to be with the LMI, ANZ has approved the loan but they get knocked back at the LMI stage.
If there is that much security on offer, do they need LMI? At what level don't they need lmi?
My point exactly.
With Anz on lodoc > 60% LVR.
Richard Taylor | Australia's leading private lender
Let me add a bit of detail to Richard's post – All ANZ low Docs are mortgage insured if LVR over 60%.
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
