Mortgage insurance

[geoffw]

From: Geoff Whitfield


Hi,

I've just been told I can't get mortgage insurance on a block of units (8 units, regional).

Has anyone heard of this?

I've heard there's 2 or 3 mortgage insurers who cover all the business. My institution has only dealt with one- would be interested in knowing the other(s).

If I can't get LMI for a 90% loan, would that mean I cannot get a loan with any institution?

 

[Rolf Latham]

Reply: 1
From: Rolf Latham


Hi Geoff

The asset is basically considered a commercial proposition.

The reaons that these things appear such a great deal is for exactly the reason yoiu have found. Generally you require 20 to 30 deposit to make these things fly.

We have had them through at 80 on residential rates, but beyond that would be hard.

LMI is strictly not available on anything that looks or smells like commercial.

Ta

Rolf

Rolf

 

[geoffw]

Reply: 1.1
From: Geoff Whitfield


Rolf,

I asked my banker exactly this- "Is it a residential investment?". He checked, came back, and told be that it was residential.

But it looks as if the MI people treat it differently.

Why didn't they tell me this 4 weeks ago?

Thanks

Geoff

 

[Rolf Latham]

Reply: 1.1.1
From: Rolf Latham


Hiya

Because the people you are dealing with obviously have little "real" knowledge of the business.

I had a seasoned assessor tell me the other day that I couldnt have an 80 % lend for an expat (my normal numbers) because over 70 % they would need lmi. That told me everything - expats cant get LMI !

Ta

Rolf

 

[Rolf Latham]

Reply: 1.1.2
From: Rolf Latham


Awwwwwwww come on, which bank is it ?

Ta

Rolf

 

[geoffw]

Reply: 1.2
From: Geoff Whitfield


Rolf,

NAB.

Last thing today, they came back to me. Their proposal is using my house & IP1 as security, instead of me using those properties as security for LOC, which was providing the deposit for the block of flats.

Monday is bank holiday, so I can't find out until Tuesday if OK. But he sounds confident. And if OK, no MI at all.

I have crossed fingers, as well as other body parts

Thanks for your help.

Geoff

 

[Rolf Latham]

Reply: 1.2.1
From: Rolf Latham


Hi Geoff

NAB, now im really surprised, they are normally very sharp.

Youve got to do what youve got to do to get the deal done, sounds like a nice little tie together that will possibly sterilise your equity growth.

If there is enough equity to do the deal on a cross collateralised basis then there must be enough to do it on a non xcoll basis, unfortunately most lenders are trained and conditoned to obtain "maximum contribution".

If youre getting the deal at residential rates youre already ahead, and if you knock it off at 80 % with using equity from your other props then great !

Ta

Rolf