Next step??

[cyan1978]

Hi all, it's been a long time since I last posted. We got our permit for our subdivision but sold the property with the permit due to circumstances at the time. No regrets though as it got us into our PPOR in a desirable location for schools, transport etc and I believe long term, great capital growth as well.

We have an investment property in regional VIC and are keen to continue investing. We are keen to get a property in metropolitan Melbourne, preferably a one or 2 bedder older style apartments/units to do up and then rent out., and retain for downsizing if it suits our needs in the future.

One of us is in a medico profession and I did not realise that most banks will waiver the LMI for up to 90% LVR. We are currently at 80% LVR (combined PPOR and IP) for a portfolio just over a mil. Does this mean we are able to draw out our equity up to 90% LVR and borrow 90% for the new property as well???
I would ideally want to borrow 110-115%(purchase price of 2nd IP, plus stamp duty + reno costs, to maximise tax deductions). Is it right to assume I can use the extra 10% equity from my current properties, borrow 90% LVR for the 2nd IP and if there is any extra $$ leftover from the 10% equity, to chuck it into my offset account against my PPOR?? I would certainly use all the extra equity from the the 1st IP to reinvest into the 2nd IP but will probably need to top it with some equity from the PPOR, with any extra leftover $$ being parked into the offset account.

Is that how the LMI waiver works?? And is it possible to compound the effects for future properties down the track ESP if there is appreciable capital growth??

Thanks for your time and I hope the above makes some sense!!

 

[Rolf Latham]

welcome back

Take care with the LMI waiver policies of most lenders..... there are some rules around them, which are not impossible to navigate around

most will suggest you cross collateralsie your current PPOR with the new place.

while in and of itself on the surface that doesnt look like an issue, its soon can become one.

Subect to vals and serviceability you can do it the right way and have each property separate, even with different lenders if u require it

ta
rolf

 

[Shahin_Afarin]

Not all lenders have LMI waiver to 90%. Some do and each have slightly different rules and conditions for the waiver. Also not all medico professions are eligible for the LMI waiver.

Whats the occupation title and the existing lender?

If it ticks all the boxes then you should be able to do 90% equity release.

In terms of structuring the properties and loans - ensure that:

1. The properties are not crossed
2. Get a couple of upfront valuations as you may end up funding one loan with one lender and another with another lender depending on valuations
3. Set up separate facilities against the PPOR so you do not contaminate the tax deductibility of the loans.
4. May need to consider IO instead of P&I depending on your circumstances.

 

[cyan1978]

Profession is veterinarian and existing lender is NAB

PPOR is IO loan with offset account
IP 1 is IO loan~105% of purchase price- 80%LVR and the remaining 25% was paid with equity release from PPOR and packaged into another loan for tax deductability. However, based on recent valuations on IP 1, capital growth has resulted in the original 105% becoming ~ 80% LVR of current valuation

Hence, LVR of PPOR is only ~73%

My understanding is that the properties are not x collateralised. Is that correct?? Am keen to proceed but if we are releasing equity from both properties, would that mean I would most likely have multiple accounts for IP2 so as to make a clear distinction of investment loans for tax purposes? Bank fees will start to be a fairly decent cost too if that is the case isn't it??

 

[Shahin_Afarin]

NAB do it under Medfin.

Get a couple of upfront vals done (you can do it under NAB) and see what sort of equity you can get across different lenders (lenders that do the 90% LMI waiver).

To me it looks like the properties are crossed.

Please give me the values and loan amounts against each property and I will tell you how it should be structured.

NAB have a package fee and it gives you the ability to create splits without additional fees.

 

[cyan1978]

Can I send you an email with details?? My understand in from my broker was that the properties were not crossed!! That was something we didn't want in the first place.

 

[bez23]

NAB do it under Medfin.

Get a couple of upfront vals done (you can do it under NAB) and see what sort of equity you can get across different lenders (lenders that do the 90% LMI waiver).

To me it looks like the properties are crossed.

Please give me the values and loan amounts against each property and I will tell you how it should be structured.

NAB have a package fee and it gives you the ability to create splits without additional fees.

Do brokers have access to medfin ???

 

[Shahin_Afarin]

Can I send you an email with details?? My understand in from my broker was that the properties were not crossed!! That was something we didn't want in the first place.

Yes thats ok.

I would recommend calling the bank and asking them if they can confirm if the properties are crossed - they may be able to tell you this over the phone.

 

[cyan1978]

Email just sent, thanks!