Opinions sought

S

slammindan

Hi guy,

I'm imagine my scenario is a walk in the park for some of you but I was hoping for some general advice.

IP : $550K (based on residex report, suspect it's probably more like $525K)
Loan: $395K (with offset)
(Original loan was 97% so LMI paid)

I've approached my current lender IMB for $300K for a PPOR. They've offered the following:

- Redraw of $100K from IP : $100K + 395K @ 6.19% (3 year fix - IO) LVR 90% so LMI top up will be necessary
- A new loan of $190K @ 6.49 (variable IO with 100% offset)

Due to hitting my serviceability limits this is a total of $290K for a new PPOR. I'd obviously need to meet the difference and additional cost of approx $25K (stamps, LMI topup etc).

If the revaluation is around $525K it would be more like $270K I'd say.

I'm thinking the next step is to see what my options are with other providers using the redraw.

I'd appreciate any advise you can give.

Thanks,

SD
 
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I think that's a bad idea. Under the current proposal you are going to be paying LMI on a 90% lend AGAIN on a $500,000 loan. This is very expensive.

If, instead, you refinanced your current IMB loan to 80%, get an extra 45k out in cash, then go buy the new PPOR with a 80-90% lend and you'll pay far less in mortgage insurance and avoid paying for it twice because it is a much lower loan amount. AND IMB will want to cross collateralise your two loans together...please go back to the drawing board and/or get some advice from a broker.
 
Aaron_C said:
I think that's a bad idea. Under the current proposal you are going to be paying LMI on a 90% lend AGAIN on a $500,000 loan. This is very expensive.

If, instead, you refinanced your current IMB loan to 80%, get an extra 45k out in cash, then go buy the new PPOR with a 80-90% lend and you'll pay far less in mortgage insurance and avoid paying for it twice because it is a much lower loan amount. AND IMB will want to cross collateralise your two loans together...please go back to the drawing board and/or get some advice from a broker.
Click to expand...

Thanks for the advice.

I asked about the cost of LMI and they've said that it would only be a few thousand $ as I've paid it before. They've also said the properties wouldn't be cross collateralized.

I like the idea of LMI on the smaller loan. Good one.

I initially used a broker but they came up with $100K less than I've managed directly...

Cheers
 
Far cheaper to get the LMI on the smaller property. Also lots of lenders have a delegated authority with the mortgage insurer for small loans like that - so it's far easier to have it approved. I don't think IMB have this.
 
Hi,

I think that is reasonable advice from IMB...as you paid LMI already their max loan of 90% is the way to go and use the cash out as deposit.

BUT if you want a lager loan for the Owner Occ property what I would do is see if they will do the cash out loan for you (The $100K) before you have found a property to buy. That way you can potentially use another lender for the owner occ secured loan. They may extend a bit more than IMB are willing to. Don't tell them this though as they would not be allowed to extend you the loan on the basis that you were then going to gear up more than they are comfortable with with another lender. They probably will do it though if you also do a pre approval with the at the same time for the owner occ loan (even if this is less than you need)....then you just dont use the pre approval.

One caveat on all this... sometimes it's not smart to try and beat a lenders servicing model as most are reasonably generous, so you have to ask are they being overly conservative or I am being overly aggressive.
 
Hiya

IMB are an ok lender, I used to use them a bit for resi , but now only comm, and they have a good product in that area too.

My questions to you are

1. Is the serviceability limit YOURS, or the lenders ?
2. What is the actual $ LMI premium you have paid so far ? Id say your new LMI on the 100 k will be relatively small unless u took the loan out aaaaaaages ago
3. Does IMB have any rules for "cash out" ie, you go and buy the new property with another lender, but use the equity pull loan to get your 100 k out of your existing place ?

ta
rolf
 
BUT if you want a lager loan for the Owner Occ property what I would do is see if they will do the cash out loan for you (The $100K) before you have found a property to buy. That way you can potentially use another lender for the owner occ secured loan. They may extend a bit more than IMB are willing to. Don't tell them this though as they would not be allowed to extend you the loan on the basis that you were then going to gear up more than they are comfortable with with another lender. They probably will do it though if you also do a pre approval with the at the same time for the owner occ loan (even if this is less than you need)....then you just dont use the pre approval.
Click to expand...

When I asked about redrawing for the purposes of a deposit with another provider IMB said they didn't have a problem with it.

One caveat on all this... sometimes it's not smart to try and beat a lenders servicing model as most are reasonably generous, so you have to ask are they being overly conservative or I am being overly aggressive.
Click to expand...

This is a very good point.
 
IMB are an ok lender, I used to use them a bit for resi , but now only comm, and they have a good product in that area too
Click to expand...

I've been happy with IMB since I've been with them. In general they've always been pretty helpful.

1. Is the serviceability limit YOURS, or the lenders ?
2. What is the actual $ LMI premium you have paid so far ? Id say your new LMI on the 100 k will be relatively small unless u took the loan out aaaaaaages ago
3. Does IMB have any rules for "cash out" ie, you go and buy the new property with another lender, but use the equity pull loan to get your 100 k out of your existing place ?
Click to expand...


Thanks for the questions.

1. I think IMB have been reasonably fair in their evaluation of my current situation. However my cash flow position will improve within the next 3-6 months so I'm looking at how that will impact things.

2. They've confirmed that LMI is a princely sum of approx $550 (based on 77K)

3. When I posed this questions they said that they don't have a problem with me taking the equity and using another lender.
 
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IMB's commercial product is quite good right now. Not a bad bunch to deal with actually either - compared to some other lenders' credit departments that are the bane of my existence.
 
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