Hi, this is my first post so please be gentle.. My wife and I have just put an offer in on our first IP. We currently have our own house which has about 100K equity, and its current LTV ratio is 80%. I wanted to use this against the IP on top of about $30K cash, the problem is my bank want 12K for stamp duty + $10K for LMI, this is at an LTV of 85% on the IP – does this sound reasonable? I had already paid $12K LMI on our current property as we didnt have a 20% deposit at the time. Im wondering if to go with a completely different lender, if i do, I only have about 8% deposit (cash) as the IP is valued at 380K – should I stay with my current lender or go with a different one, maybe one that doesnt charge as much LMI!?
Stevo stevo stevo hold right that my man.
Are you telling me you are going to tell me you have a non deductible debt and are going to put in cash to your new IP. ……hopefully not.
Pay down the PPOR debt by 30K and then take out a separate IP equity loan for the same amount. Now you have $30K of deductible interest each and every year.
Now in regards to the LMI question it is hard to answer this without have all of the facts to hand but it sounds like you could shop around and get a cheaper LMI premium.
Whilst in the main there are only 2 insurers (ok i will grant you there are a couple of lenders self insuring) each lender has it's own premium rate negotiated.
I can think of one product that would be an 80% lend and then give you a further 10K unsecured at home loan rates. This gets you around the LMI issue yet you still borrow more than 80%. Difficult to assess of course without having all of the facts to hand.
Whichever way you go think careful as whilst it is a deductible expense it is still an upfront payment and if you can minimise it why wouldn't you.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Rich, I only thought about putting the cash down if i decided on a different lender… I take it im better off leaving the money in my offset account or paying it off my PPOR – I get that now – loud and clear LOL! Once ive done that I assume i should use both properties to calculate the LTV ratio and find a lender that has a cheaper rate than Wpac…? OR should i just ring you in the morn seeing as you're in QLD!
Hi Steve
You are welcome to ring / email me mate and be happy to assist.
Have to say i wouldn't use Wesuck if they were the last lender on the planet as their serviceability and credit models are a joke for investors.
What you have to remember is to build a portfolio there is more important things to consider than the bottom line interest rate.
The loan structure is probably the most important factor as if you get that wrong you will be going uphilll very slowly.
With your own funds if the numbers don't match p you are better off paying it off your PPOR and then setting up a separate equity loan for the same amount.
Of course your Banker will have no idea of why you are doing this and even iif we explain it to them in plain English wont get it but that's Banks for you programmed to work on what is best for them and not you the client.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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