LOC information please

[Evad]

I had my unit valued just yesterday; it came in @ 230K. I owe 163K. I was going to get a LOC for deposits on cheep property in NSW under 100k.

The bank has said that they will lend (in equity LOC) 21K to take my LVR to 80% or 44K to take it to 90% but I will have to pay LMI.

I think from what ANZ was saying is that I will have to have a deposit to get this LOC also. How can I have a deposit to access my deposit? I may be wrong about understanding this correctly. ANZ also talked about my closing costs I would need to come up with.

Is this correct?

Just learning here but I thought that I would be able to access the difference between what I owe and what I own. EG: 77K, it wouldn’t require any sort of deposit and LMI was irrelevant. NB I payed LMI on the original loan for the unit.

I thought that I can get a LOC and use it for whatever I want. I could but a whole bunch of shoes if I liked (which I wouldn’t) but my meaning is that the bank shouldn’t care or won’t know what I draw down this money for.
It sounded like because she knew I want it for deposits she was trying to tell me that I can’t use this money for deposit and closing cost, insurance , whatever.

Are there questions or things I should stipulate to the bank that I require? Am I asking the wrong questions?

The way I wanted to structure it was.

Get a LOC, use it as a deposit on another house.

Get a third loan through another bank for the balance of the property.

So I would end up with my original unit loan. (separate)
A LOC loan (deposit) and a third party loan (balance) and have the rent cover the majority of these 2 loans.
Using the LOC for further deposits or as a buffer for things that come up.

Any ideas ?
Thanks in advance

 

[Rolf Latham]

Hiya

The 3 loans scenario is correct.

The depsoit they are talking about is that you need to leave 10 % equity unused. So a 90 % lend is 207 - 163 owed = 44 k available.

ANZ are actually a bit fussy what you use the LOC for.

ta
rolf

 

[Evad]

Hiya

The 3 loans scenario is correct.

The depsoit they are talking about is that you need to leave 10 % equity unused. So a 90 % lend is 207 - 163 owed = 44 k available.

ANZ are actually a bit fussy what you use the LOC for.

ta
rolf

K so it is my understanding that i can get 44K but i have to leave some in the property.
And
Should i not tell them what i want it for. Or get the LOC and just spend the way i see fit anyhow

 

[Learnings]

"Investment"

FYI: you only need to topup the LMI to the new loan value, not pay it all over again.

Good Luck

 

[Collector]

I have a question relating to LOC (I don't want to hijack this thead - sorry if you think I did, and I don't think that my question warrants a new thread being opened) so here is the question:


My situation: No debt, own home value $700k, want LOC for $100k, have $100k in saving.

Want to buy 2 ip's this year, LOC for deposits and fees, loans for balance, savings into offset accounts, rents to pay back loan and LOC - both properties will be CF+ - so wont cost a cent of my money - wont need to add any $$.


What security does the bank take when granting/approving/providing a line of credit?

1. Do I have to give them the title to my home, or
2. Do they place a cavet on the property(ies)

 

[Peter_Tersteeg]

A LOC is a home loan, so yes, any bank that sets this up will take your title as security and register a mortgage over your property.

 

[Collector]

A LOC is a home loan, so yes, any bank that sets this up will take your title as security and register a mortgage over your property.

Thank you for your quick answer

 

[Evad]

FYI: you only need to topup the LMI to the new loan value, not pay it all over again

Thank you Learnings for the LMI tip – they probably would have charged me it all again. I will mention this when I call today.

So when I accept I assume they will get me to sign another contract.
What is the best way to set it up?

Do I have a cheque book attached
Is interest chargeable as soon as the money is there or only when I draw down on it?
Can the interest be set to IO?
Would anyone fix the interest if you can?
Anything in the contract I need to be aware of?
Any other info i may not know to ask would be appreciated or any ideas on how they might catch or sting me.

Thanks again all for the help.

have $100k in saving

And Collector wow I wish I had 100k saved up. Well done

 

[RumpledElf]

Thank you Learnings for the LMI tip – they probably would have charged me it all again.

Hrm, I think we got charged LMI twice. Once when we got the first loan (at 61% LVR without a valuation) they charged us $300 and when we got a topup (at 61% 2 months later on the same fsking properties but with a larger loan - ie we shoudn't have got charged LMI the first time if they'd bothered to value the place) they charged us another $300. Plus another few hundred in setup fees for making the loan bigger.

And when we sell the last house they'll want a few $100 in delayed establishment fees, another few $100 in govvy fees, $350 odd to change the security and then another $350 odd so our money doesn't just disappear into the void of mortgage - current loan has no redraw/offset facility and that fee changes it so it does. Yet another reason I'm expecting to make a loss on selling my old house - the mortgage for that one has the $3000 (stamp duty + conveyancing + bank fees + LMI) or so setup fees for both loans in it, the loan for this house has the house and nothing but the house in it because of the idiocy of rolling all the fees into my PPoR loan. That's 4% of my 'profit' already gone, then there's the 5% agent's fee ... oh well, on the upside there'll be no CGT ...

Fees fees fees fees.