All Topics / Finance / 15% deposit no LMI: interest free term

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  • Profile photo of Alex MAlex M
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    @alex-m
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    March 20, 2014 - 1:00 am

    I'm applying for a loan on an investment property with a 15% deposit and no mortgage insurance.

    I noticed in one of the boxes 'Interest Only (max 5 years)' – what happens at the end of 5 years, reverts to principal and interest?

    Anyone else going the 15% deposit with no mortgage insurance? Any benefits or negatives to this over a 20% deposit loan?

    Profile photo of Jamie MooreJamie Moore
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    March 20, 2014 - 1:47 am

    It reverts to P&I – but you can often change it back to another IO term.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Alex MAlex M
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    March 20, 2014 - 3:27 am

    Thanks for the reply Jamie.

    Profile photo of Corey BattCorey Batt
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    March 20, 2014 - 7:51 am

    Some lenders won't allow you to continually apply for new IO terms, but generally you can just refinance the loan which will open up new IO terms.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Richard TaylorRichard Taylor
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    March 23, 2014 - 10:52 am

    In saying that the product is not particularly flexible so after 5 years you may well be paying P & I repayments.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Arun BhutaArun Bhuta
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    March 24, 2014 - 9:45 am

    Hi Alex,

    Are you considering other features of the loan which might help you pay less over all in the period of 5 years?

    Profile photo of Richard TaylorRichard Taylor
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    March 24, 2014 - 10:23 am

    Hi Arun

    The security is a block of units so we have moved on from Citibank.

    Not a matter of other features more a matter of getting the deal done at the right lvr.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Arun BhutaArun Bhuta
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    March 24, 2014 - 10:29 pm

    Hi Alex,

    If you are considering of option of 15% or 20% deposit, then It may be worth while to consider total cost of funding over the period of 5 years.

    I agree if you have only option of 15% deposit then the city bank is more appropriate then others as it does not attract Lenders Mortgage Insurance.

    Profile photo of Richard TaylorRichard Taylor
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    March 25, 2014 - 1:47 am

    Arun as mentioned it is a block of units and not mortgage insurable.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Arun BhutaArun Bhuta
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    March 25, 2014 - 3:59 am

    Dear Alex,

    I have not seen in your Question Block of units as security. Did I miss something?

    Profile photo of Richard TaylorRichard Taylor
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    March 25, 2014 - 4:14 am

    Yes i am doing the deal for the client at the moment so some inside running.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Arun BhutaArun Bhuta
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    March 25, 2014 - 4:29 am

    Dear Alex,

    Sorry as the question was incomplete I was only able to answer based on information provided.

    All the best for the deal.

    Profile photo of Alex MAlex M
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    @alex-m
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    March 26, 2014 - 8:39 am

    Thanks for the replies. Not going with that one as it's metro/capital cities only.

    Profile photo of Arun BhutaArun Bhuta
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    March 27, 2014 - 2:44 am

    Dear Alex,

    If you are going for 20% deposit then there are many lenders and most appropriate lender is easy to find.

    Profile photo of Arun BhutaArun Bhuta
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    @arun-bhuta
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    April 10, 2014 - 9:27 pm

    Dear Alex,

    Just trying to know what was your final option, 15% or 20%.

     

    Profile photo of Richard TaylorRichard Taylor
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    April 10, 2014 - 11:29 pm

    Arun we went 20% in the end.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

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