85 % LMI Loan vs 80% LMI Loan

[keneth]

Hi heres my scenario

purchased property $460k

Current Cash - $150k

Looking to get finance organise, as I have a 60 day settlement.

I have found 2 scenarios

Westpac - interest only loan 7.16% Variable. LMI (85%) - (available cash post settlement. $59k)

Nab - interest only loan 6.97% variable - LMI (80%) (available cash post settlement $33k)

My thoughts are that going with Westpac will give me the ability to purcahse another property as I will have $59k in available funds..... I know this comes at expense of a slightly higher interest rate..

But I think this might be an opportunity to purchase a second property far sooner than i would be able too. second property would be looking at around $300k...

I think this is a way for me to avoid mortgage insurance on the 2nd property, without having to rely on revaluations to access equity.

any thoughts on this? or if people would go for a different lender?

 

[Ms Jade]

I agree with you. On that scenario I would definitely prefer the 85%. If you are then able to leverage into another property you'll be able to control a lot more assets & this is something that is important to me in the growth phase. However, if you'd rather not leverage up it's still worth going the 85% and keeping the extra cash as a buffer.

 

[tobe]

Id go 90, or 95 if possible, with a lender who capitalise the LMI. The purchases are IP's (?), therefore the LMI and the interest payable on the LMI is tax deductable.

Id pop the spare cash in the offset account, and keep at least 10% of the total debt there always, SANF. Id revalue and use equity for further purchasers.

 

[Peter_Tersteeg]

Consider an alternative.

ING 6.96%, no ongoing fees. They're waiving LMI on 85% loans if it's a purchase and you've got stable employment and clean credit.

 

[epic_scooby_doo]

the alternatives

ive been checking out these guys (loans.com.au) recently as they are new and will do no LMI up to 80 and will capitalise up to 95

low rate 6.85 with 6.79 cr and no application or annual fees

im getting around 6.89 with a 350 annual at the greater which is a pro pack and comes out at 7.18 so thinking of changing to loans.com.au as its much cheaper

 

[Mick C]

I agree with PT - consider ING- they only release TODAY a NO lMI at 85% ( via the broker network)- if you go direct it will be available in 4 weeks time from what im told from ING.

Special ING rate- Mortgage simplier

6.96% ( advertised as 7.12%- http://www.ingdirect.com.au/home_loans/interest_rates.htm) - Basic loan

6.99% - 7.09% depending on loan amount ( orange advantage) - 100% Offset.

Either way NO LMI payable at 85% with clean credit and 2 years employment with same employer.

Regards
Michael

 

[Mick C]

ive been checking out these guys (loans.com.au) recently as they are new and will do no LMI up to 80 and will capitalise up to 95

low rate 6.85 with 6.79 cr and no application or annual fees

im getting around 6.89 with a 350 annual at the greater which is a pro pack and comes out at 7.18 so thinking of changing to loans.com.au as its much cheaper

ahha no LMI at 80?? most banks do NO LMI at 80...
I havn't used loans.com.au before- but looking at their site they are a mortgage manger who just package the loan back to the public ( hence why most of their loans have LMI)

End of the day it's not always abt the rate, because rate can and WILL change! it comes down the the structure, flexibility, Service, access, stability and total fees ( on going, application and break)

P.s as i said i havnt had any dealings with loans.com.au so make your own judgement


Regards
Michael

 

[Rolf Latham]

85 or higher

Why ?

Challenge or opportunitu

ta

rolf

 

[Mick C]

85% and higher can be usefully depending on the client's overall "strategy" and tax bracket.

Paying down PPOR faster with the extra cash...or

If your planning on aggressively buying a few more IP - then it can help...but you must make sure the overall -ve effect is positive at the end of the year! No point losing more then you should unless you have a "Set strategy" and game plan in mind.

Regards
Micahel

 

[womble66]

Consider an alternative.ING 6.96%.

Isn't it ING that will not let you roll over you IO loan after the initial period?

 

[Rolf Latham]

Try doing a top up.......................... : )


ta
rolf

 

[Mick C]

with ING once you finish with your IO period...it goes auto to the standard product - you can not continue the IO....so apply for their max IO which i think is 5 years ( might be 7??- have to check lol)


They are good for basic loan product and for ppl who dont require a lot of "change" or "flexibility" because they are really bad with top up!! they have a max of $5,000 once you hit 85% LVR or something stupid like that ...


Regards
Michael

 

[womble66]

with ING once you finish with your IO period...it goes auto to the standard product - you can not continue the IO....so apply for their max IO which i think is 5 years ( might be 7??- have to check lol)


They are good for basic loan product and for ppl who dont require a lot of "change" or "flexibility" because they are really bad with top up!! they have a max of $5,000 once you hit 85% LVR or something stupid like that ...


Regards
Michael

Yep thats what I thought. With ING its seems you can't do things most investors want to do.