Releasing equity

B

blackenator

I am familiar with the how equity is released and usually done at the 80% mark. I am currently building my investment property and am hoping to have to release some equity I am hoping to do a 90% equity release instead of the standard 80% so I can purchase another property.

I wanted to know if there are any drawbacks from releasing the 90% equity in comparison to the 90%? Besides paying lmi?

My goal is purchase as many properties as I can as soon as I can. i currently live at home and have no expenses besides this property and have a surplus of about 800$ a week.

Thanks
blackenator
 
Has LMI costs
Some banks might have tighter lending criteria
You generally want to do it with a lender who has a DUA, speak to your broker about whether this is applicable to you.

In general, i much prefer it.
 
LMI skews at 88% and 90% so consider 88% and determine whether this may be a more feasible option than the full 90%.

Also it depends which lender you are doing the equity release - some lenders will need evidence (say CBA will need you to actually show the COS of the purchase before releasing the funds) whereas other lenders like Westpac will just need stated purpose.
 
^ Great advice!

1. Def make sure your not crossed before you enter the lMI space
2. Aim for 88% if it's practical to do so.
3. Def need a lender that will support equity release over 80% ( Not all will allow for this -esp if it's "cash" that you want...ie you havn't found a place yet and dont have a signed contract" ) You will need a DUA lender.

No real disadvantage going over 80% for equity release beside paying LMI.

Cheers
 
Thanks guys for the feedback I am currently with CBA are they more of the favourable banks for lmi release for 88% / 90%? and could you please advise what a dua lender is?
 
Last edited:
CBA is ok, they have DUA ( Dua = authority to approve the loan on the LMI behalf) just make sure your "equity release" reason fits your profile and financial situation; there's no black and white line or any hard fast rule with equity release over 80%...and the last thing you want is a rejection on your credit file.

Example of bad profiling
- Used for shares when you have no shares in your holding or exp
- Funds used deposit on future IP, when you can service the equity loan but can't service the future loan based on CBA "servicing cal"

Etc...
 
blackenator said:
Thanks guys for the feedback I am currently with CBA are they more of the favourable banks for lmi release for 88% / 90%? and could you please advise what a dua lender is?
Click to expand...

CBA is not the best (in terms of flexibility) when it comes to equity releases over 80%. If the cash out/equity release is to purchase another property then they will request an executed COS and formal approval letter (if you are going with another lender).

There are other banks that are more flexible but I wouldn't necessary choose a lender purely based on the best cash out policy.

Also did you pay LMI in the past for this loan? If so then then its best to stick with CBA as you may lose the LMI credit.

If not then you certainly have much more flexibility.
 
On the credit score side

Cash out, LMI and WBC are a very good cocktail for a system decline........

As has been suggested by others for financial reasons, keep the END lvr to <90 %

ta

rolf
 
thanks again for the advice guys.

I have paid lmi on the loan with cba and currently having the bank value my build. Their is another land release and am very eager to get in and want to my due diligence before I put a down payment on the block. So If I have already paid lmi on the loan when I do equity release say around 88% the lmi proponent should be lower?
 
blackenator said:
thanks again for the advice guys.

I have paid lmi on the loan with cba and currently having the bank value my build. Their is another land release and am very eager to get in and want to my due diligence before I put a down payment on the block. So If I have already paid lmi on the loan when I do equity release say around 88% the lmi proponent should be lower?
Click to expand...

If you are topping up with the same lender, they'd normally just have you pay the LMI difference. Eg if you bought at $X at X LVR with 5k LMI and the new value is worth $Y with Y LVR so needs 6k LMI, then you just pay the 1k difference.
 
TheFinanceShop said:
LMI skews at 88% and 90% so consider 88% and determine whether this may be a more feasible option than the full 90%.

Also it depends which lender you are doing the equity release - some lenders will need evidence (say CBA will need you to actually show the COS of the purchase before releasing the funds) whereas other lenders like Westpac will just need stated purpose.
Click to expand...

I've often done equity release up to 90% with CBA didn't need COS just a pre-approval or servicing showing that they can afford the next purchase.
 
Not sure when you did them last or if the purpose of the cash out was something other than an equity release to use as a deposit for another purchase but I have done 3 in the last 6 weeks and had to provide an executed COS.
 
TheFinanceShop said:
and the purpose was to use for another purchase?
Click to expand...

Yes it was actually 2 of them. Two separate cash outs for clients doing a JV. Cashed out for both with pre-approval for purchase. Clients were going to auction. Funds are now sitting in fresh separate offset account waiting on contract.
 
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