Where can u get the 20% deposit?

[Casserole Dish]

It gets easier, so I'm told... We are saving slowly for our 2nd IP and are gradually getting there. The boring way.

Also hoping for a little bit back at tax time (I know, miles away timewise).

And we are aiming for 10%. Don't really have a major problem with LMI. We see it as a neccessary evil. Paid it before, I'm sure we'll pay it again.

Sorry not much help, just wanted you to know that you aren't the only one. Look at it this way, it gives you more time to research. And we all know the best part of anything good is the anticipation

 

[bradje]

Hi Shopgirl

You mentioned paying the stamp duty and legals. Who says you have to pay it? It's just a tradition and people will argue black and blue that you can't get the vendor to pay the stamp duty and your legals but you can. We simply persist and show how one of the biggest law firms and real estate agents use this "costs inclusive" price in their transactions.

We figured, if they can then so can we. The result: we get our vendors to make out cheques to the OSR and our solicitors at settlement for both these costs.

Hi Paul,
So u get the vendor to pay SD and legals. Is there any advantage in doing it this way vs negotiating a lower purchase price which takes these into account already?

thx,
JB

 

[reeco]

Hi Paul,
So u get the vendor to pay SD and legals. Is there any advantage in doing it this way vs negotiating a lower purchase price which takes these into account already?

thx,
JB

each to there own it seems. Theres logic in both

 

[Lofty]

Hi JB

The advantage to us is in this bit, "It is also important to not try to hide this arrangement from your lender. We found that sometimes they notice the arrangement and reduce the amount they'll lend us and often they don't notice and lend on the full purchase price."

When the lender "doesn't notice", they've just lent us 80% or 90% (or whatever your LVR is) of your stamp duty and legal costs. That means we have less of our money in the transaction and that's what we aim for.

Cheers, Paul

 

[--(< PJ >)--]

The ultimate conundrum.

I think a few folks are experiencing this conundrum at the moment JB.

A similar question is the entire reason I logged on tonight!

I'm looking for a 7%-10% deposit option so I can start with an extra lender. Don't want to do it via LOC because that'll trigger a re-val of holdings at a bad time.

Personal loans from places like CBA can be used as deposit for land, but not for structures or construction finance. Bummer. Overdraft is an option if you only need a small injection. Still looking...

I'll post anything I find & share the info with you.

PJ

 

[euro73]

1. You cant refinance above 90% these days, so keep in mind that you need to factor in new LMI for the new lender, so effectively you're actually refinancing at 88% or thereabouts plus LMI. If that doesnt provide 20% equity based on improved valuations, thats a dead end.

2. You can get a personal loan for 20% plus costs but you'll need to factor in how that will affect serviceability. If you can service the loan at 80% with a higher interest personal loan providing the 20% plus costs- theres your solution. At some point down the track , if you see some Cap Gain, you can look at consolidating the 20% plus costs into the loan.

3. I wouldnt go near vendor finance at the LVR's you are discussing- its incredibly hard to get vendor finance refinanced and if you are going to be around 90%LVR across your portfolio you could be stuck. Some lenders may refi vendor finance below 80%LVR but neither of the Mortgage Insurers will at 90%.

4. Find 5% and try and finda lender who will do a 95% LVR loan with no gen savings. Not sure there is one at the moment. You'll generally need 15% if the deposit doesnt include gen savings. If you have 5% gen savings, you can probably find a 95% deal somewhere.

 

[--(< PJ >)--]

Hi Shopgirl

You mentioned paying the stamp duty and legals. Who says you have to pay it? It's just a tradition and people will argue black and blue that you can't get the vendor to pay the stamp duty and your legals but you can. We simply persist and show how one of the biggest law firms and real estate agents use this "costs inclusive" price in their transactions.

Paul, I like the way you think! I'll look into this... PJ

 

[--(< PJ >)--]

1. You cant refinance above 90% these days, so keep in mind that you need to factor in new LMI for the new lender, so effectively you're actually refinancing at 88% or thereabouts plus LMI. If that doesnt provide 20% equity based on improved valuations, thats a dead end.

2. You can get a personal loan for 20% plus costs but you'll need to factor in how that will affect serviceability. If you can service the loan at 80% with a higher interest personal loan providing the 20% plus costs- theres your solution. At some point down the track , if you see some Cap Gain, you can look at consolidating the 20% plus costs into the loan.

3. I wouldnt go near vendor finance at the LVR's you are discussing- its incredibly hard to get vendor finance refinanced and if you are going to be around 90%LVR across your portfolio you could be stuck. Some lenders may refi vendor finance below 80%LVR but neither of the Mortgage Insurers will at 90%.

4. Find 5% and try and finda lender who will do a 95% LVR loan with no gen savings. Not sure there is one at the moment. You'll generally need 15% if the deposit doesnt include gen savings. If you have 5% gen savings, you can probably find a 95% deal somewhere.

5. You can get an overdraft providing the deposit (16%ish interest). Just like a personal loan, it can be refinanced into a mortgage.

Option 5 is very risky, and only for the brave (or crazy) who have high cash flow but are equity poor. I am trying this for the first time this month, to top up what I need for a deposit.

Note - Personal loans aren't usually allowed to be used for deposits on real estate, except for land purchase.