Gday there,
New to the forum and doing as much research as possible, hopefully leading to my first IP purchase.
Current situation.
Salary, 76000 before tax, very stable income
Just payed of all debts, car,credit card etc
Only have 10k at the moment
Have the ability to put away 1.5k per fortnight.So as it stands iam looking at trying to build my deposit up to around that 30-35k mark. Hopefully towards APR16. Would like to spend around the 300k and factor in the extra costs involved
Looking at different investment loans and the stock standard is around that 10% with the obvious LMI.
The lowest i have seen is 5% for an investment loan with RAMS. Unless iam reading their product wrong. If it is that 5% there must be some sort of catch? I understand the LMI will be high but is it better to get that 10% or get in a bit earlier to the IP market.?Thanks for your time and any advice would be greatly appreciated.
Cheers
Hi Dave
Firstly congratulations on starting to plan for your first IP certainly exciting times.
Yes a 95% lvr on an investment loan is available but i have to say it is very unlikely you would qualify as this loan would be credit scored and without owing other property it is doubtful you would be accepted.
In addition you need to understand that LMI would be deducted from the loan amount and therefore you need to cover this cost on settlement.
The premium rate on a 95% lvr is a lot higher than it would be at 90% because of the added risk and therefore you are often better off to take 90% + LMI than you are to take 95% less LMI.Of course more and more lenders are now insisting that the 90% is inclusive of LMI but there are still few exceptions to the rule.
Have you considered buying a property as a PPOR, satisfying the stamp duty requirements in the State and then renting the property out down the track.
You won’t get a 95% interest only loan on a PPOR but it might save you a few dollars in entry costs in relation to stamp duty etc.
I hear on the grape vine a new lender is coming to market with a blended 100% loan but at this stage we can’t release any further details.
Cheers
Yours in Finance
0-40 Properties in a decade. Email me for a copy of my API interview.Richard Taylor | Australia's leading private lender
Hi Dave
Welcome aboard – 95% incl of LMI is still possible but as Richard said – difficult to get approved.
Personally – in this new world of IP financing I’d be aiming to save enough to cover a 12% deposit and costs. That will open up your scope of lenders, the LMI won’t be ridiculously high and your chances of approval greatly enhanced.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Realistically 90% LVR inclusive of LMI is a great option for IP purchases for as long as possible (unless the person has excessive amounts of deposit funds available for a large portfolio expansion).
Unlike 95% LVR’s which are getting nigh on impossible, the costs of a 90% LVR are significantly cheaper AND allow you to draw any available equity growth quickly as most lenders will only allow topups to 90% LVR max. The ability to draw out equity gains early on is especially important for those early in their investment career, where they are scraping together their deposits where possible.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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