LMI and deposit

Hiya

You can borrow extra for stamps/costs.

The only way that is possible if you have another property you can borrow equity against.

Cheers

Jamie

Do you have a PPOR, or is this your first purchase period?

credit card the closing costs? especially if you will possibly have most of the costs by settlement time eg 6 weeks

The only question I have though is if you have this many issues coming up with closing costs + 20% deposit……maybe you aren’t quite ready to buy your own place?

TM

Why don’t you consider using some of your 20% deposit to cover the Stamp Duty and acquisition costs.

Go for a 90% loan and cop some LMI. It can be your opportunity cost friend in this climate as well as being a Tax deductible expense.

Be careful with a long settlement as you wont be able to lodge a finance application until you have proof of funds to complete and means you are unconditional without any guarantee that the Bank will stomp up the cash to complete.

VF is an option and certainly we are seeing more and more enquiries for such product.

Cheers

Yours in Finance
0-40 Properties in a decade. Ask me how.

Jamie Moore wrote:

The only way that is possible if you have another property you can borrow equity against.CheersJamie

Hey Jamie,
Just to clarify on your response here – Are you saying that you cannot borrow stamp without having equity to borrow against?

I’m sure you are, but I found it a little confusing the way you worded that.

Cheers,

Benny wrote:

Hi Pollardis,

The only way that is possible if you have another property you can borrow equity against

I agree with you – the wording probably should have looked more like this :-The only way that is possible if you have another property with equity you can borrow against
But then, I don’t believe that is the ONLY way – with the smallish amounts needed, a Personal Loan, or even a Credit Card could do the job.
Benny

That is true, but those debts would need to be disclosed which reduces your borrowing capacity by a greater amount than borrowing it against another property. And the interest charged on those borrowings might actually mean that LMI could come out cheaper in the long run.

Cheers

Tom

I bought for the exact reasons you posted few years back and I would really not recommend doing for that reason.

Although I am happy for the lessons I have learned being a home owner and landlord, I would be in a much better financial position now.

Even though the mortgage might be cheaper than rent, you have to think about all the extra headaches that go with owning property. Bills, council rates, insurance, maintenance costs and so on. Also what if you lose your job or want a change in career or want to start your own business? Not having that commitment is going make your life just that much easier.

However if you are set that this is the right decision for you, there are a couple of options which I think are better than a personal loan.

You mentioned that a long settlement will give you enough time to save up for stamp duty. You could switch your credit card to a card with a lower cash advance interest rate than increase your credit limit and do a cash advance (this will not increase your commitments by too much on the banks calculator as most banks calculate your credit card commitment based on approx 2.5% of your max limit). If your bank does not offer a cash with a low cash advance limit then you can balance transfer to another credit card with a lower rate. Just be aware to check your borrowing capacity allows your to have two high limit credit cards.

Most banks do not like customers using cash advance on their credit cards to cover purchase costs but if you have already done the cash advance prior to borrowing they can’t really ask you “where are you getting the money to cover stamp duty”.