Dang I hope you are not planning to build a couple of units on any of your properties.
2@95% or 1@80% ?
- Thread starter Wirra436
- Start date
Dang I hope you are not planning to build a couple of units on any of your properties.
I think this strategy makes a lot of sense for people starting out with their property investments. There is a lot that can go wrong with the economy, employment, relationships, etc that can cause people to need to sell unexpectedly. An unexpected sale will generally mean the purchase and sale costs are wasted (and LMI is one of the purchase costs that can be avoided).
Taking risks is fine, as long as you know what they are and how likely they are to occur. Anyway, my preference is to err on the side of caution in most cases and I think it makes sense to have an equity buffer as well as some savings and also makes it easier for an investment ppty to be cf+ or neutral.
LMI premiums for 95% are roughly double the premiums for 90%, so even at this level of property price, an injection of $10k cash can save you $2500 of LMI. Waiting an extra few months (or however long it takes) to save the $10k will often mean the market has increased and the same property costs you more than $2500 extra but if you already have the $45k savings, I would prefer not to borrow above 90% and you could buy 2 properties for $150k at 90% with your savings.
In saying that, as long as you are confident that you will be holding the properties for 10 years or more, the LMI premium will be fairly insignificant in the long run.
Interesting that no one touched on the cost of refinancing. I started with 95% on pretty good variable rate. After 2 years I might have to refinance to another bank.
1) if my loan is equal or less than 80% lvr , I will not have to pay for lmi
2) if my loan is more than 80% then I will have to pay for lmi again as the credits don't transfer
Basically you will lose out on the lmi hence incurring a hidden cost of refinancing.
Cheers
1) if my loan is equal or less than 80% lvr , I will not have to pay for lmi
2) if my loan is more than 80% then I will have to pay for lmi again as the credits don't transfer
Basically you will lose out on the lmi hence incurring a hidden cost of refinancing.
Cheers
Even if the LVR has dropped below 80% and no LMI is payable with the new lender - if you do decide to take that loan above 80% in the future, you'll be hit with a whole new LMI premium. However, if you were with the original lender still, and you wanted to take borrowings above 80% again - you'd only be for a small adjustment on the previous LMI fee.
Cheers
Jamie
I don't see this as an issue at all. If you plan ahead and broker places you with correct lenders then you won need to refinance. You do get lmi credits when you topup with the same lender.
I've personally gone no higher than 90% LVR on an individual property but if faced with the choice of 1 at 80% or 2 at 95%, I'd definitely go with the latter.
Agreed.
Having bought two properties in recent times with cash, I find it to be free of fuss, less stress and hassle than dealing with brokers, banks and other lenders / financiers.
One is your office, the other one? Have I missed any of your threads or you meant your PPOR?
PPOR & Office! That's the two properties China has.
Spot on. It has crossed my mind, though, to mortgage up the PPOR for investment purposes.
Yeah I know what you mean. That whole calling a broker and filling out a few forms is pretty stressful. I once had to go into therapy for 6 months after applying for a loan, I was a mess.
Unless of course you were filling out Rolf's fact finder, 3 booms and 2 bust cycles will have gone by in the time it takes, plus your DNA sequence needs to be processed and submitted.
bwahhhahahahaa !!!
I wouldn't say over $1M for everyone is a bad thing. It all depends on the individual situation. If you're not over 80% you're not going to have LMI (genworth) involved either way... also not all cases that go to genworth don't get approved, issue is that they assess with a much higher assessment rate than the bank.
That's not always the case... what happens is were the broker has put you policy changes? Or don't get a valuation in future that stacks up. These are out of the brokers control. Still can happen.
Are you talking about LMI generally or a specific lender here? Cause not all lenders have a diferent assessment rate to their LMI providers, be that Genworth or QBE.
The advantage of flying below the DUA radar isnt because flying above it might get declined, its to provide more flexibility to face risks and or changed circumstances in the future.
