FINANCE QUESTION Hindsight is wonderful

[molly1a]

Hi All
The last couple of weeks we have been reviewing the way our loans are setup as they are all Xcoll all of our investments are buy and hold and they are all positive cash flow.
Our current situation is that we have run out of equity. so i have beeen doing lots of research plus asking questions on the forum about loan structures. I was sitting here tonight and just seeing how different it may have been if in the beginning we had taken out our equity from our PPOR and had a LOC
So what I was asking was if we used LOC to purchase could we have bought some houses using 20% deposit and others using say a 10% deposit paying LMI on that purchase.
Also if you pay LMI are you paying this only on the purchase you are making at the time ?
Thanks

 

[D.T.]

My head hurts

 

[Rixter]

Hi All
Looking at our finances in regards to how we purchased we went with the banks ideas and of course our loans are Xcoll we have always bought buy and hold and they are all positive cash flow as I have said before we have run out of equity. so i have beeen doing lots of research plus asking questions on here about loan structures
Hindsight is a wonderful thing so can i ask (what I have written below would this have worked) and if so can we restructure with our bank ST George or would we have to change banks ??
We owned our own house valued at about 350K 80% of this is 280K which we should have put in LOC
1st Investment cost 320K 20% deposit plus costs say about 73K we may need to top up a few thousand
2nd Invest cost 289K use 10% deposit plus cost plus LMI 44K we may need to pay small aount again
3rd Invest cost 235K use 10% deposit plus cost & LMI 40K plus some cash from us
4th Invest cost 285K use 10% deposit plus cost etc as above 40K
5th Invest cost 285K as above 40 K
This would leave 43K left out of our 280K equity enough to still buy again
We could have even used less deposit in 1st purchase and paid LMI would this have been possible
VIRTUALLY I AM ASKING COULD WE HAVE USED THE 280K LOC AND BOUGHT INVESTMENTS USING THE LEAST DEPOSIT EVEN IF IT MEANT PAYING LMI IF THIS WAS POSSIBLE WE WOULD HAVE BOUGHT ALOT MORE HOUSES.
ALSO IS THE LMI PAID ONLY ON EACH NEW LOAN ONLY
Thank you for all your help0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000011111111111111111111111111111111111112

Can you rephrase your question?

 

[molly1a]

Gees I am tring to edit

sorry obviosly late and i stuffed up i have tried to edit and it wont save sorry its all over the place
I AM ASKING COULD WE HAVE USED THE 280K LOC AND BOUGHT INVESTMENTS USING THE LEAST DEPOSIT say 10% for each house PAYING LMI
IF THIS WAS POSSIBLE WE WOULD HAVE BOUGHT ALOT MORE HOUSES using the equity

Thanks

 

[Rixter]

sorry obviosly late and i stuffed up i have tried to edit and it wont save sorry its all over the place
I AM ASKING COULD WE HAVE USED THE 280K LOC AND BOUGHT INVESTMENTS USING THE LEAST DEPOSIT say 10% for each house PAYING LMI
IF THIS WAS POSSIBLE WE WOULD HAVE BOUGHT ALOT MORE HOUSES using the equity

Thanks

........Yes

 

[Rixter]

My head hurts

I had to increase the resolution to fit it all inside my monitor.

 

[molly1a]

Thanks

Thanks for responding so quickly i was stupid should have researched this more before we began buiying as we certainly could bought alot more houses Can I restructure loans with St George or do I have to change banks to do the above with LOC
Thanks again

 

[Rixter]

I strongly suggest you sit down and run your personal situation past an IP savy mortgage broker.

That way you can find out what options you have available to then make an informed decision on which path to take.

I hope this helps.

 

[molly1a]

Who to go to

Will do can you suggest anyone

 

[Rolf Latham]

Thanks for responding so quickly i was stupid should have researched this more before we began buiying as we certainly could bought alot more houses Can I restructure loans with St George or do I have to change banks to do the above with LOC
Thanks again

Is all your existing stuff with stg ?

If yes, then in most circumstances, using our modelling you'd have reached your concentration
Risk limit with that one lender, but like some people, the allure of a small interest rate saving and convenience may over rule what most would call common sense.

I'm assuming that all your loans are stand alone and not secured against each other ?

Ta

Rolf

 

[redwing]

I'm assuming that all your loans are stand alone and not secured against each other ?

Ta

Rolf

Nope

Hi All
Looking at our finances in regards to how we purchased we went with the banks ideas and of course our loans are Xcoll we have always bought buy and hold and they are all positive cash flow as I have said before we have run out of equity.

Hi Molly, you've asked if you could have done a certain strategy with hindsight

What did you actually do and what is your current situation, Rolf and others may give some food for thought on strategies moving forward

 

[alexlee]

I strongly suggest you learn to use punctuation. As a first step, write a post, then delete half of it, because at least half the words in your posts don't provide any information.

To get good answers, you have to learn to articulate the question clearly. I wonder how many experienced people saw your post and just didn't bother because they couldn't make sense of what you're asking. If you can't use punctuation, at least group things under headings and use short phrases.

It's like asking someone questions about your finances to someone when you're drunk. Really better to do it sober.

 

[bez23]

I strongly suggest you learn to use punctuation. As a first step, write a post, then delete half of it, because at least half the words in your posts don't provide any information.

To get good answers, you have to learn to articulate the question clearly. I wonder how many experienced people saw your post and just didn't bother because they couldn't make sense of what you're asking. If you can't use punctuation, at least group things under headings and use short phrases.

It's like asking someone questions about your finances to someone when you're drunk. Really better to do it sober.

+1

Also typing in all caps makes it look like you are shouting.

 

[molly1a]

Harsh words

Wow that's harsh to tell you the truth it was late and as usual property on my mind. I remember dozing that's why there are multiple letters when I looked at the post I tried to edit but wasn't successful.
Could do with some tuition there on how to edit post or delete ?
I was just writing and I probably didn't look at punctuation like I should have no excuses on my part. I should know better with the caps but when I noticed it was in caps I just couldn't be bothered writing it again.
A big sorry to all.

 

[Angel]

Try the edit button at the bottom right of your post. Once edited, you hit the save button.

And no, the comments weren't harsh. This is harsh -" Contact any mortgage broker on this forum then go eat a cup of concrete."

 

[alexlee]

If you want people to give you detailed comments, you have to make yourself understood first. Did you notice the replies to your post are either very general or ask you what your situation is? If you can't be bothered to ask clear questions, you're the one who loses out.

 

[westminster]

Hindsight is amazingly clear

1. Yes you could have probably done it the way you suggested
2. It's not too late to fix up some, if not all of the spiders web
3. Don't try and unravel it yourself, you'll end up in tears.
4. Grab any broker from here - read their posts and find one you like - and sit down with all the information and see what they suggest

 

[Rolf Latham]

Upon redwings answer to my xcoll question, have just reread the orig post.

Lmi and xcoll isn't just not best practice, it's perilously close to malpractice, broker or bank initiated.

You would be paying an lmi premium far greater than you'd need to and the chance of ever cleaning it up while under lmi is slim.

Ta

Rolf

 

[Peter_Tersteeg]

Wow that's harsh to tell you the truth it was late and as usual property on my mind.

It may be harsh but I took a look at your post and couldn't make sense of it so I moved on. From my point of view it was late and I was a bit tired. The new post is better but it also helps if you put a gap between paragraphs.

As far as I can tell, you're asking the following:

So what I was asking was if we used LOC to purchase could we have bought some houses using 20% deposit and others using say a 10% deposit paying LMI on that purchase.

Also if you pay LMI are you paying this only on the purchase you are making at the time ?

The answers are yes, and yes.

Had you avoided cross collateralisation you'd be able to say clearly which loan is secured by which property. Working out tax deductability is very easy because it's very clear which loans are for investment use and which aren't. You borrow the same amount of money but in a far more structured manner.

If you do need to pay LMI, you only pay it on the the loan and the property in that single transaction, not the entire portfolio. Far cheaper.

Untangling a large mess of x-coll'd properties can take a lot of time and effort (depends on how big and tangled it is). With 5 or more properties I'm thinking you'd need to move at least 3 to another lender, perhaps all of them across 2 new lenders.