Is 90% LVR possible without Mortgage Insurance

[thunderbolt]

Hi all,
Long time lurker needing some help. Does anyone know if any lenders at the moment are lending to more than 80%LVR without LMI? Everyone I have looked at will do the 90% , no problems, but the LMI is ridiculous. Qualifying is not an issue, just looking at options to reduce the costs.
Thanks
Thunderbolt

 

[tobe]

there was a special some time back mortgage managers were paying, or passing on a discount of the LMI if it was less than about $5k from memory. I dont think its still applicable. Some health profeessionals have the LMI waived with some lenders for their first home.

couple of options, pay LMI on the place you want.
Put 20% down on something cheaper,
put off the purchase while you save 20%

 

[tom32]

put off the purchase while you save 20%

Even with prices cooling off quite a lot here SW of Perth and some owners getting pretty keen to sell even at low offers at least according to the agents, my wifes expectations in the house we should buy appear to have increased proportionally, keeping us perpetually just under a 20% deposit even as we save more over time.

This waiting strategy was then one I employed 3 years ago odd when I moved to Perth and to be honest while I have payed 75k odd in rent over the 3 years I have saved this in interest and house prices have not really moved here at all.

 

[Peter_Tersteeg]

There's actually laws around the way loans are funded and mortgage insurance. I don't remember the details, but if a lender is to lend more than 80%, they must take out an insurance policy or there is some sort of premium on the funds.

As a result lenders will only fund loans over 80% if an LMI premium is taken. Who pays for it is dependant on what the lender's willing to do.

The reality is that most lenders will require LMI to be paid if the loan is around 90%. The costs are way out of proportion to the risks taken on by the insurer, but there are limited insurers so that's unfortunatley how it is.

 

[Mick C]

Hi all,
Long time lurker needing some help. Does anyone know if any lenders at the moment are lending to more than 80%LVR without LMI? Everyone I have looked at will do the 90% , no problems, but the LMI is ridiculous. Qualifying is not an issue, just looking at options to reduce the costs.
Thanks
Thunderbolt

As PT mentioned, LMI will still be paid for all loan over 80% - else that bank's funding cost for that loan would be outside the "AAA" rating = higher cost to access the funds.

But there are lenders as a way to get more clients will offer to pay for the LMI if its under 85%, or pay for a portion of the LMI for LVR over 85%.

Regards
Michael

 

[tom32]

Thats a good idea as it really seems a rort as you approach the 80% LVR. At 90 or 95 LVR you can understand why it has to be expensive but at say 82%LVR why does it go from a few k to nothing.

thats when you really want to try to avoid it in my opinion even if it takes another 6 months to save. If you are way of I guess it does not matter as much but close you might as well wait.

 

[Rolf Latham]

Hi

Some lenders will do a no lmi to 90 %, if its a really strong deal and its mainly an IO loan over a shorter period than normal.

Lenders like ING have a reduced equity fee internal product.

How much are u looking to borrow

ta
rolf

 

[Nathan]

I settle on most things now days using 80% just to reval within a month or so and extract over 100% this means I get all my capital back for further purchases, and the cashflow is still positive.

 

[Rolf Latham]

I settle on most things now days using 80% just to reval within a month or so and extract over 100% this means I get all my capital back for further purchases, and the cashflow is still positive.

Not surprising given the likely high volume of activity on ur credit file and possible exposure to LMI providers.

Your strategy is the only one I can think of to grow as fast you have

ta
rolf

 

[thunderbolt]

Thanks for that Rolf, I have a memory seeing some ads for 90%, but couldn't remember who was offering it. It is for a refinance, purchased in 2008 with a guarantee from parents, house now rented and I want to remove the guarantee, which bank wants 5k in LMI, definatley a deal-breaker so am looking around. Looking to fix for three years interest only.
257K, paid 285K in 2008, so assuming bank will still value at that, maybe a bit more but not enough to get it to 80LVR.
thunderbolt

Hi

Some lenders will do a no lmi to 90 %, if its a really strong deal and its mainly an IO loan over a shorter period than normal.

Lenders like ING have a reduced equity fee internal product.

How much are u looking to borrow

ta
rolf

 

[Nathan]

Maybe capitalise your LMI?

 

[SupaRex]

I settle on most things now days using 80% just to reval within a month or so and extract over 100% this means I get all my capital back for further purchases, and the cashflow is still positive.

Hi Nathan,

Just wondering how you reval within a month or so. I was under the impression that banks won't reval unless you are applying for a new loan?

Also, what do you mean "extract over 100%"?

I don't doubt anything you say, just trying to understand how you do it and how it works.

Kind regards,
Brad

 

[Rolf Latham]

Hi Brad

Im speaking out of turn, our experience is that if a reno has been done u can get the equity out with most lenders, and if the lender you have used, MOVE.

Break costs, new gov costs, claw backs of comms etc, but its just a variable cost of running the business

ta
rolf

 

[SupaRex]

Hi Brad

Im speaking out of turn, our experience is that if a reno has been done u can get the equity out with most lenders, and if the lender you have used, MOVE.

Break costs, new gov costs, claw backs of comms etc, but its just a variable cost of running the business

ta
rolf

Hi Rolf,

Just on the first point - is there any way to access the equity if there has not been a reno done? For example, I bought a place for $386k and my sister in law (who works at a REA) said if they were listing it then and there, they would do so at $420k.

 

[Marty McDonald]

Hey,

ING and Citi both offer 85% no LMI sounds like it may work for you.

 

[Rolf Latham]

Hi Rolf,

Just on the first point - is there any way to access the equity if there has not been a reno done? For example, I bought a place for $386k and my sister in law (who works at a REA) said if they were listing it then and there, they would do so at $420k.

rare that a lender will allow it, which may mean u need to move lenders.

In addition depending on the area and current state of the market 4 to 8 % discount off list is not unusual..............so youd really want to wokr with a lender where you can order the val BEFORE doing an app

ta
rlf

 

[Nathan]

Hi Nathan,

Just wondering how you reval within a month or so. I was under the impression that banks won't reval unless you are applying for a new loan?

Also, what do you mean "extract over 100%"?

I don't doubt anything you say, just trying to understand how you do it and how it works.

Kind regards,
Brad

Thanks brad.

I mean well, lets use my reno property I am working on atm at Muswellbrook.

I paid $105,00 (asking $115,000)

I am spending $30k reno so $135,000 spend.

I reval for $250,000 (maybe $260,000) - Val sitting on desk of bank next week, my banker already run one and comes up stumps.

So $250,000 x 80% = $200,000 new loan.

- Inital funds of $135000 = 100% loan and still got $65,000 extra. Rent $400pw.

Now I only pull funds to support other properties or deals as resi interest is better than other interest which can kill.

The deal doesnt need to be that good.

It could be like one I bought before xmas in sydney for $205,000 got a loan for 80% or $164,000 (thereabouts)

Now I did nothing to this home, I will reval in a couple of weeks when I meet with banker to reval that @ $250,000 (Desktop val I did myself said $296,000) and get 80% loan or $200,000 therefore I release all my capital back and the home is self sufficient.

Hope this gives some insight on how it works,

 

[Spectre]

Westpac just brought back their 85% no LMI today. might help?

 

[Mick C]

Seems like most of the banks are bring back a Higher LVR with no or reduced LMI.....the good old days are coming back!

Regards
Michael

 

[Rolf Latham]

Seems like most of the banks are bring back a Higher LVR with no or reduced LMI.....the good old days are coming back!

Regards
Michael

dont hold ur breath, u might go as blue as your avatar

although there is some releasing of policy on the surface, the current underwriting standards are stillmuch tougher than pre gfc days

ta
rolf