Two reasons:
1) You can't even GET the 95% LVR that you pay LMI for, if you're lo doc,
and/or
2) You may have to pay LMI on EVERY loan when you're lo doc (depending on the lender).
To those who borrow using LMI
- Thread starter bradje
- Start date
1) You can't even GET the 95% LVR that you pay LMI for, if you're lo doc,
and/or
2) You may have to pay LMI on EVERY loan when you're lo doc (depending on the lender).
Sorry Trace,
but:
1) I have a Mobius loan Lo Doc that I got 95%LVR no LMI. (This loan is no longer available from this lender.)
HOWEVER:
The interest rate is now 11.45%. At the time I went into it it was 1.5% higher than your standard 80% Lo Doc. There is always a catch!
And there is a Deferred Establishment Fee of $7500! Agh!
2) I choose to pay a higher interest rate than LMI on the majority of my Lo Docs. (Main Advantage = More Cashflow)
Conclusion: There are loads of Lo Docs with no LMI, but the Interest Rate is always higher. You just have to do your numbers and decide what is best for you.
Hiya Josko
So I assume you only hold your loans for a short time ?
WITH lmi being a once off , but the rate loading for LMI equivalent holding trhough the loan term I cant see how this would help cashhlow.............I would have thought it would do the opposite.........Im always teachable though
Not many lo doc loans without lmi anymore..............they carry the premium in some cases, but the loans are almost always insured these days.
We used to do a fair bot of ING and Challenger uninsured lo doc........all gone now though
ta
rolf
So I assume you only hold your loans for a short time ?
WITH lmi being a once off , but the rate loading for LMI equivalent holding trhough the loan term I cant see how this would help cashhlow.............I would have thought it would do the opposite.........Im always teachable though
Not many lo doc loans without lmi anymore..............they carry the premium in some cases, but the loans are almost always insured these days.
We used to do a fair bot of ING and Challenger uninsured lo doc........all gone now though
ta
rolf
Tracey hit the nail on the head - with my lender, you can go I think to 90% without LMI, but if you're low doc, you have to pay LMI, even though they cap your LMI at 80%. So not only do I get stuck at 80%, I have to pay LMI for the privelege. But as I said - doesn't bother me, just a cost of doing business.
Sorry Trace,
but:
1) I have a Mobius loan Lo Doc that I got 95%LVR no LMI. (This loan is no longer available from this lender.)
HOWEVER:
The interest rate is now 11.45%. At the time I went into it it was 1.5% higher than your standard 80% Lo Doc. There is always a catch!
And there is a Deferred Establishment Fee of $7500! Agh!
2) I choose to pay a higher interest rate than LMI on the majority of my Lo Docs. (Main Advantage = More Cashflow)
Conclusion: There are loads of Lo Docs with no LMI, but the Interest Rate is always higher. You just have to do your numbers and decide what is best for you.
I think you've hit the nail on the head - to get no LMI you're paying extra % in interest rates, which I would'nt be interested in. Much rather pay $2k LMI up front (built into the loan) and be on the normal interest rates (+ discount), than be paying penalty interest.
I use LMI every time to purchase. The reason: Ability to buy more property NOW. I always make sure I can service the loan and I chose to think of it this way: Not only is the LMI tax deductable, but think of that $4k over the course of your property investing vs the extra capital growth you (probably) will generate...
How do you ensure that you don't expose yourself too greatly with one MI? Is this a criteria you use when selecting finance?
HI Rolf,
Cashflow is my biggest problem, It's the upfront fees like LMI that stop me from purchasing.
Sure, I have taken a loan with LMI when they have Capitalised it on the loan. But if they want to subtract it from the 80% that they lend me, then I prefer not to come up with the extra 2%, which is thousands of dollars. I tend to buy properties for Capital Gain so in some cases the LMI would have been $8000.00. 2k Steve? I wish! I'd pay it if it were that low!
My last two purchases were done with no cash down, I had not a cent to spare so had to opt for a higher interest rate than LMI.
In the case of a 400k loan, the LMI can take literally years to make up.
I am actually thankful I didn't pay LMI with my Macquarie loans as I have found the need to refinance twice from them. Once for a poor val - 80k under and now because their interest rate just keeps going up.
I guess it all depends on how I'm positioned at the time of buying.
HI Rolf,
Cashflow is my biggest problem, It's the upfront fees like LMI that stop me from purchasing.
Sure, I have taken a loan with LMI when they have Capitalised it on the loan. But if they want to subtract it from the 80% that they lend me, then I prefer not to come up with the extra 2%, which is thousands of dollars. I tend to buy properties for Capital Gain so in some cases the LMI would have been $8000.00. 2k Steve? I wish! I'd pay it if it were that low!
My last two purchases were done with no cash down, I had not a cent to spare so had to opt for a higher interest rate than LMI.
In the case of a 400k loan, the LMI can take literally years to make up.
I am actually thankful I didn't pay LMI with my Macquarie loans as I have found the need to refinance twice from them. Once for a poor val - 80k under and now because their interest rate just keeps going up.
I guess it all depends on how I'm positioned at the time of buying.
regards Jo
True, that's just a figure I threw out. Can't remember the last LMI figure I paid. But in my case it's usually just a top up amount of the extra funds, as opposed to an entire new purchase. As I said, to me it's an unavoidable cost of business, so it is what it is. Different strokes etc.
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