Quick question(s) for the brokers

[Roosterman]

It's been answered before but just want to check in the current environment:

I want to buy a PPOR with an interest-only loan.

My servicability etc is excellent, I'm a high income earner.

Will the banks do this? I'm with ANZ but can change if necessary.

Also roughly what would LMI be on a lend of $500k - around the $12k mark?

many thanks
Roosterman

 

[Aaron_C]

Hi Roosterman,

LMI depends on the LVR and how much the loan is...so many other questions...

 

[Roosterman]

Thanks Aaron,

I'm looking at a 95% lend on a $500k property

 

[Aaron_C]

Without knowing any other information, LMI will probably be around $14,000 without including stamp duty. Also you have to check whether LMI is even allowed for the property you are looking at.

 

[Peter_Tersteeg]

A quick calculation suggested you'd be looking at about $15,840 with ANZ (includive of stamp duty).

Rates between other lenders vary from about $13,300 to about $19,350.

ANZ are known to be a bit conservative. A 90% lend with them would be reasonably straight forward. They wouldn't be my first choice for a 95% loan with interest only on a PPOR.

 

[Rolf Latham]

Hiya Rooster

In addition to whats been said

Couple of things

1. 95 % lends with many lenders are tough to get through, best to target a lender that you already have a relationship of some sort with ( not always but often gives a better result)

Your credit score is determined by a bunch of other things other than serviceability, and income ( indeed sometimes a high income can be a negative). So if your broker thinks your on the edge, then look at a lender that doesnt credit score per se, AND has inhouse LMI approval.


2. try and keep the loan amount to 500 k. The Next step up to 501 k with many LMI providers means an increase of up to 35 % on the premium : (

ta

rolf

 

[Mick C]

It's been answered before but just want to check in the current environment:

I want to buy a PPOR with an interest-only loan.

My servicability etc is excellent, I'm a high income earner.

Will the banks do this? I'm with ANZ but can change if necessary.

Also roughly what would LMI be on a lend of $500k - around the $12k mark?

many thanks
Roosterman

Change your PPOR to I/O only first, should be quite straight forward with ANZ since you have good serviceability ; but will still depend on LVR, reason, security type and if LMI is involved.


Then tackle the new $500k loan- LMI prices above as advised by the boys.

Regards
Michael

 

[Roosterman]

Thanks for the responses guys.

I probably should have clarified - I have 2 IPs with ANZ that I plan on revaluing and topping up to 80%.

This will release $50k ($25k deposit, $25k costs).

I'm then looking at buying a property for $500k, and capitalising $10k of the LMI, so really a 97% lend. Will shop around for this new loan, although as Rolf says it could be tricky getting 97% from a new lender.

The basic premise here is that I've been paying $600 a week rent for a couple of years now, it's a nice luxury but logically I am far better off using that $30k a year to finance a $500k property I can live in

 

[Aaron_C]

Oh you want to capitalise the LMI on a 95% lend? Certainly possible but that narrows down the number of lenders to a very few.

 

[Peter_Tersteeg]

Existing loans with the ANZ is a plus in your favour if you've got strong servicing and you don't get flagged on exposure risk. I would be looking to make the new purchase with a different lender though.

Another option to explore would be to increase your existing loans over 80% so you only require a 90% loan against the new purchase. It's certain to cost more in LMI, but it'll probably be more comfortable for lenders risk criteria. This isn't as much 'recommendation/suggestion' as a 'worth exploring'.

 

[Marty McDonald]

yeah even if you can get the coin from ANZ might be an idea to take to another lender I reckon. That new loan will no doubt takle you borrowings to over or close to a mil?

 

[Roosterman]

Yes that would take me over a million with ANZ, so it may be best to look elsewhere. I'd like to leave the IPs at a maximum 80% LVR.

My circumstances are:

No dependents
No debt other than the 2 IPs (current value $900k, loans $660k)
$180k salary, been with the same employer since 1994
$50k in savings that I don't really want to spend

Surely any new lender would jump at the chance to lend me $500k at 97% LVR for a PPOR?

 

[Rolf Latham]

Surely any new lender would jump at the chance to lend me $500k at 97% LVR for a PPOR?

well no..............many wont do 95 for a NTB client in any case.

Someone will likely do it though.

PPOR is a bit easier than IP.

next u are gonna say you want HDT and IO as well

ta
rolf

 

[luckyone]

well no..............many wont do 95 for a NTB client in any case.

Someone will likely do it though.

PPOR is a bit easier than IP.

next u are gonna say you want HDT and IO as well

ta
rolf

He already said the IO bit

I want to buy a PPOR with an interest-only loan.

 

[mattnz]

Surely you are better off saving the $15k cost of LMI and doing a 15% deposit with no LMI (I assume these deals still exist). Using $50k savings to avoid $15k expense seems a no-brainer, especially if you are earning enough that you could easily save the $50k in another year or so.

 

[Mick C]

Surely you are better off saving the $15k cost of LMI and doing a 15% deposit with no LMI (I assume these deals still exist). Using $50k savings to avoid $15k expense seems a no-brainer, especially if you are earning enough that you could easily save the $50k in another year or so.

Especially if it's an PPOR....

 

[Rolf Latham]

Surely you are better off saving the $15k cost of LMI and doing a 15% deposit with no LMI (I assume these deals still exist). Using $50k savings to avoid $15k expense seems a no-brainer, especially if you are earning enough that you could easily save the $50k in another year or so.

There are many circumstances where the 15 k lmi MAY be a good investment

Some examples are

1. the property will one day become an IP
2. the 50 k can be used for challenge or opportuniyt ( say another property business or some biz venture)
3. Retain 50 k cash simply for comfort and increased risk management


85 % no lmi deals are around but do have various product restrictions,

LMI isnt for everyone, thats for sure, but by the same token, its a good fit for many even where they dont "need" to use it

ta
rolf

 

[farmilor]

Thanks for the responses guys.

I probably should have clarified - I have 2 IPs with ANZ that I plan on revaluing and topping up to 80%.

This will release $50k ($25k deposit, $25k costs).

Taking $ out of IP's to use as a deposit for PPOR will bring in a whole range of tax issues that you need to thnk carefully about before going down this path.

 

[Roosterman]

'Tis OK.

If this happens (still waiting for the vals) it will be on separate loans, and I am aware it won't be deductible.

It will more than likely be an IP in a few years hence....and the loans (and LMI) will become deductible.....

 

[Qlds007]

If the property will be used as an IP down the track why wouldnt you offer up your cash deposit by way of a Term Deposit and borrow 100%.

The LMI will be deductible on proportional basis over 5 Year or the Term of years whichever is the shorter and will be adjusted in year 1. You maybe able to maximise your LMI deduction and future interest claim with a little clever structuring.