105% loans

[Kevmeister]

Several people on these threads have spoken about 105% loans.

What does that actually mean?

For example, does that mean that have borrowed more funds than the value of the IP, but in reality only a portion of the funds are secured against the IP, and the remainder have been secured against another property (eg. LOC against PPOR or a against a different IP etc?)

A little bit confused about that.

 

[Chris G]

Hi,

I know of a few people who borrow 106% of the properties value so that allows them to effectively have none of their own money in the deal.

One method is to borrow 26% against an existing property to use as deposit and cover costs etc.(Through a LOC or similar) This leaves the loan on the new property at 80% LVR which avoids paying LMI.

Cheers
Chris