Capitalising LMI / Stamp Duty

[azzae89]

Hi guys,

Still very much a student to all this and am still learning, but had a question about capitalising LMI and/or stamp duty.

Can someone please explain to me how this works? I was having a read of the RAMS Fast Track home loan option which offers 97% LVR and capitalisation of other up front costs. Does this mean stamp duty/LMI is paid for by RAMS (in this case) and tacked on to the principal of your loan?

Sorry if this doesn't make sense i'm a total newbie to real estate.

Cheers!

 

[Jamie M]

Hiya

Lenders will generally allow you to go up to a max of 95% of the properties value and allow you to add the LMI on top (the majority of lenders will only allow you to add a portion of the LMI with a max overall LVR of 97%). Some won't cap it at 97% and will effectively go up to a max of 99% - ING and BWA spring to mind here.

Borrowing to cover all costs such as stamp duty, etc is only possible if there's other security up for grabs - like equity in a guarantors property for instance.

Cheers

Jamie

 

[tobe]

Hi guys,

Still very much a student to all this and am still learning, but had a question about capitalising LMI and/or stamp duty.

Can someone please explain to me how this works? I was having a read of the RAMS Fast Track home loan option which offers 97% LVR and capitalisation of other up front costs. Does this mean stamp duty/LMI is paid for by RAMS (in this case) and tacked on to the principal of your loan?

Sorry if this doesn't make sense i'm a total newbie to real estate.

Cheers!

Rams Fast track is a difernt product. Because mum and dad are guarantoring the loan, they are basically lending their equity to you to borrow against. therefore Rams will lend you the purchase price, the stamp duty and any other costs. Because they are lending less than 80% of both properties value, there is no mortgage insurance payable.

Without fast track, rams can lend up to 97% of the purchase price. If you do borrow 97% usually 2% or so of this is made up of the mortgage insurance, which is capitalised to the loan amount. Rams and quite a few other lenders have this 97% policy, capitalised mortgage insurance.

 

[HLE]

azzae89

Guarantor loans help to save you money by negating the need for mortgage insurance and limit your out of pocket expenses by adding in settlement costs (stamp duty and legal fees etc).

When the bank does this they place a limited guarantee on your parents property for roughly 20% to 25% of the purchase price.

This can be paid out and removed over time be making extra repayments or if the value of the property goes up you can re value the house and release it using the equity in the property!