St George top-up and IP Purchase

[MsAli]

Hi all,

Being a new property investor I'd like to get some views from SS members who have dealt with St George and investment properties in general.

I purchased my first PPOR last July as first home. It was a 2 BR villa (built in 1992) in Western Sydney purchased for $190,000 on 95% LVR with St George Bank. The loan is around $184,300 (inc LMI capitalised). The property is close to shopping centre, train station, hospital etc) and is situated in a small complex). It has a private courtyard and contains reverse cycle air con.

I purchased this through a buyers agency and was fortunate enough to get it well under the market values at the time. The property settled mid September 2010. I was living in the property for six months as required by the FHOG requirements. In the mean time since the place was in a fairly dirty shape, I got renovations of around $4k done where I:

- got new tiles in the kitchen and laundry
- some handyman work required in the kitchen
- got the place repainted
- got new blinds
- (lost the keys while on a holiday away and had to get new keys!)
- got some electrical powerpoints changed

The current values of 2 BR units (which are relatively new compared to my place) is around $225k - 230k. Actually, a slightly bigger 2 BR villa around the area had a deposit taken for $232k - So I'm being conservative.

Now I'm preparing to put the property on the market for rent. I'm also thinking about my next purchase. Due to limited funds, I want to go back to the bank and request a 95% top up. Assuming, if the property val comes back to be $227k, I'd have around $31k available (give or take and I'm not quite sure how LMI will be re-capitalised etc).

I've been told that I'd need to go to the bank directly to do this.

I'd be willing to hear what experiences people have with St George re-vals? Is this too optimistic? I'm determined to make it happen and at least get one IP this year.

Views are appreciated

Thanks!

 

[Marty McDonald]

Hi,

Not sure if SGB will do 95% on the reval I think only 90% + LMI max. Giving you around $18K? They may have changed the rules in this regard so talk to them but knowing how they think I doubt they would do a 95%er on anything but a straight purchase.

You could do a 90%er and park the balance in an offset account and add to it from savings until you are ready to go again. Be careful of St.george's interest only loans with offset accounts though they used to have "interest based" accounts rather than "int only"...which is no good for this scenario.

 

[Rolf Latham]

Be careful of St.george's interest only loans with offset accounts though they used to have "interest based" accounts rather than "int only"...which is no good for this scenario.

Not used to, still do

IP secured loan u can get set up the right way, but on PPOR loans you can get the repayment offset,

Why, one of the STG staff explained to me one day that St Goerge is the only lender compliant with the consumer credit code regarding offset accts. News to me at the time.......

ta
rolf

 

[landlord78]

Hi.

We've had St George do a few reevaluations in over the last five years. These varied from:
(a) Inspecting the property personally
(b) Looking at the size of the house and block then guestimateing
(c) Taking our word on it.

We've found that it depends on your lending manager as to which approach above would be adopted. Once, when we were close to 90% LVR, a lending manager challenged the valuation that was done by an independant valuer to increase (and rightly so) the valuation of a property.

Good luck!

 

[marty29]

Hi,

Not sure if SGB will do 95% on the reval I think only 90% + LMI max. Giving you around $18K? They may have changed the rules in this regard so talk to them but knowing how they think I doubt they would do a 95%er on anything but a straight purchase.

I second that.

The only way St. G may allow you to access the last 5% equity is to x-coll both properties... even if x-coll is good, the mortgage insurance will cost you an arm and a leg...

Best check with your broker, or the bank directly

 

[Peter_Tersteeg]

I'd say your chances of getting cash out of anything more than about $10k from St George at 95% are just about zero. I haven't had particularly good experiences with St George valuations for refinances either.

 

[avatar]

I recently refinanced the home loan to StGeorge and got good valuation.
I did provide good comparable sales to aid the process.
I also got pre approval for an investment loan at the same time.
Interestingly the insurer would not allow 90% LVR on both the home and IP.

Re the offset.
Cannot recommend SGB at all if you want true offset.
Yes it is available (on IP only) but is poorly understood within the business in my experience and not well implemented.
Offset originally set up wrong (paperwork was correct.)
Had a lot of trouble finding someone that actually understood the various offset options and how to get it fixed.
Got it fixed eventually after completing more forms.
Interest rate discount increased once IP settled and when this change was made the offset changed again (no offset benefit received).
Am currently trying to get it set up correctly again.
Even when the offset was set up correctly the loan balance does not stay static as the repayment and interest charges are never quite identical.

Good luck.