G'Day !
Please share your experience
What most of the people use 95% + LMI or 80% loan ? and Why ?
I am planning to get 95% + LMI for less deposit. Pros and cons pls.
Edit: YI, I edited my post.
Hi there,
I might be missing something, but how does 95% reduce the monthly repayment?
I would also like some advice here, I understand that you are increasing the possibility of negative equity in the short term but as long as you are able to service the debt then wouldn't you be shortening your time in between purchases by looking at 95% + LMI.
Yes Paddy. You would be saving your deposits to enable u to spread them out more.
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 just have to be careful with gearing your properties to the hilt. The main risk you then face is rising interest rates. It is hard to be positively cashflowed at 95% (possible but hard). How many interest rate rises can you handle before going negative? This would be something to look at.
Also, banks are still pretty tight with their lending. They don’t offer Lender’s Insurance in some places (like rural towns under a certain population). So make sure you find that out.
But if the numbers work out then I am all for it. The more properties you buy the more growth you will experience.
If you do buy at 95% LVR I recommend you aim to get your properties to 80% LVR. This protects you in the future from unforseen circumstances, but still lets you use lots of leverage to get a great ROI.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeThanks guys, I do agree with you Ryan to aim for 80% or lower to ensure a positive return but at this stage I am 23 and working full time so I would prefer the properties to run slightly negative if it allows me to obtain more sooner and look to lowering the debt %'s a bit later when life becomes a bit more uncertain and I would benefit more from the added security.
ryan mclean wrote:If you do buy at 95% LVR I recommend you aim to get your properties to 80% LVR. This protects you in the future from unforseen circumstancesRyan, Thanks for reply.
How about taking 95%+LMI if bank approves and putting 15% (95-80) or backup money in offset a/c for unforseen circumstances as well as handy cash? Thoughts Pls !
Also, what I understand is if I take 95% loan then mortgage insurance is extra expense but if I take 80% then no need for mortgage insurance ? Suggestion Pls !
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