I know these days raising 5% deposit is all that is generally needed to obtain a home loan but how do you pay your stamp duty and lmi. Seems to me you need way more than 5%. Looking at a house around $400,000 you need more than $20,000. Just interested in how others approach this situation. Any innovative techniques others can share?
raising depost but how to pay stamp duty
- Thread starter type_one
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You need to save more, wait a bit longer. Only 5% deposit and LMI is a recipe for disaster IMO...
LMI can be capitalised into the loan so it's not paid out of your pocket. As for stamp duty, most times you just have to cough it up as cash but with the Adelaide Bank product you can get the $20,000 visa card (at home loan rates) to pay for the stamp duty. It does require a high income to service though, so speak to your broker about it.
I wouldn't say it's a recipe for disaster........necessarily.
The way I have done this in the past was to increase the loan amount to cover the stamp duty and pay a small deposit.
For example, I have borrowed 97% of the purchase price in the past and tipped in the balance as the deposit. I've also paid LMI to do it, which was also capitalised into the loan.
However, this was way back in the glory days of lending......circa 2003 / 2004.
Check with a reputable mortgage broker, as it may still be possible to do today, but will depend on how you fit a lenders serviceability models.
The way I have done this in the past was to increase the loan amount to cover the stamp duty and pay a small deposit.
For example, I have borrowed 97% of the purchase price in the past and tipped in the balance as the deposit. I've also paid LMI to do it, which was also capitalised into the loan.
However, this was way back in the glory days of lending......circa 2003 / 2004.
Check with a reputable mortgage broker, as it may still be possible to do today, but will depend on how you fit a lenders serviceability models.
Thanks guys. I have the money for a 20% or more deposit but want to use as much as I can to buy again. I just started looking at using 5% deposit instead of my usual 20% that I am more comfortable with. I like having a bit of a safety net in my properties. I have got to the point where I have a bit of money tied up in those 20% balances as prices have increased over time and the initial 20% is now a lot higher. But it seems to me it costs like and extra 10% to cover all those other costs especially LMI. So I guess I that comes in at about 15%. I see it as, why pay LMI if I can stump up 20% and effectively have that in the house instead of LMI. Stamp duty well you just can?t escape that travesty. I am still interested in how people use as little amount as possible to buy again and again and again.
They go with the highest LVR available to them, it's really quite simple. Any magic ways of getting around it wouldn't be kept secret for long.
Given you've got the cash, go with a 90% loan. You'll still need to fund the 10% deposit plus the stamp duty, but you'll also retain a little of your cash.
95% lending for investment isn't very cost effective if you don't need to borrow that much. The cost of LMI gets expensive to the point where you borrow $3 only to give $1 back to them. At 95% you'll find that accessing equity later on will be incredibly difficult.
95% lending for investment isn't very cost effective if you don't need to borrow that much. The cost of LMI gets expensive to the point where you borrow $3 only to give $1 back to them. At 95% you'll find that accessing equity later on will be incredibly difficult.
Why's that? Other than having to wait a bit longer for prices to rise to go below 90%.
Kesse at the moment valuers are also being very conservative. There are some lenders who will top up to 95% but at this level the margin of error is so thin it tends to become very touch and go.
My observation is that the clients who want to refinance to 95% are also looking to purchase at 95% and are usually heavily reliant on the refinance to get into the next deal. A bad valuation result (which is likely) would leave them short for the next purchase.
It's possible to get a 95% purchase done if you've got the cash ready. The lenders will probably make you jump through some extra hoops, but if you're relying on a 95% top up, in my experience you're going to be disappointed sooner or later in the current lending environment.
My observation is that the clients who want to refinance to 95% are also looking to purchase at 95% and are usually heavily reliant on the refinance to get into the next deal. A bad valuation result (which is likely) would leave them short for the next purchase.
It's possible to get a 95% purchase done if you've got the cash ready. The lenders will probably make you jump through some extra hoops, but if you're relying on a 95% top up, in my experience you're going to be disappointed sooner or later in the current lending environment.
Fair enough.
What if you originally did a 95% lend, prices go up then LVR is 80% and you want to top up to 90% - is that still fairly straight forward?
What if you originally did a 95% lend, prices go up then LVR is 80% and you want to top up to 90% - is that still fairly straight forward?
Usually no problem at all if you want to 90% - subject to valuation of course.
cool, thanks. You had me a bit worried there as I read your post as if loan was originally 95% and even if you wanted to top up to a lesser LVR it would still be difficult. Phew!
They can be liable if it is deemed they overvalued a property!
I am going through this at the moment. Releasing equity via a new valuation. been about two years since pruchase and i think an increase in value would be quite good. i have a figure in my head and will see what the bank comes back with. I have renovated and value in the area have jumped. To some degree it hinges on this valuation to move forward i.e. releasing quity. then again i can pay the deposit out of my own money but prefer to have the safety barrier with cash should it be needed.
Usually no problem at all if you want to 90% - subject to valuation of course.
I had 3 vals done on 1 of my property's
240 260 and 290
C An I refinance to the lender that valed at 290 and release more equity that way?
It was a io for 2 years and is up in jan
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