Forum Replies Created
Yep definitely dont think you can get away with not having to pay LMI again if you switch to another lender. It doesnt make sense that you could as LMI insures the lender. So different lender new LMI which is cost passed onto you. if you stay with the same lender then you have already paid their insurance premium and therefore a change in structure could have the premiums varied.
Its unfortunate that you had your properties crossed when LMI is payable as this would have been charged on the $580k total rather then LMI 85% PPOR and LMI 90% IP. Second way would have worked out to be cheaper in LMI cost. Now only 6 months down the line and you’re stuck.
If you’re selling the PPOR are you planning to buy another? At what value? Have you discussed portability of replacing the new security with the old PPOR in the cross? Just an idea for now. You might still want to split the properties in which case knowing what your IP is currently worth upfront will be necessary. Might not help you with LMI if you go to another lender. But NAB should be able to order your valuations upfront maybe past 6 months or get a broker to do it.
Numbers I see in the new cross with new PPOR + IP
PPOR New value : $400k
IP (new valuation): $360kNew ratio: $580k/$760k = 76% LVR (NO LMI)
OR in order to split up the loans
you only need to pay off an additional $22k to get the IP to sub 80%LVR (if valuation is at $360k) and with $130k left over (leave out an additional amount for selling costs) you only need $100k (incl stamps) for a new $400k purchase at 80% LVR. This is assuming that is the value you are after. You will have to work out the numbers to see if paying down 22k on the IP is worth it or repaying LMI (pro rata). Considering you have already forked out on LMI I would suggest staying away from having to pay anymore LMI and un-cross asap.-
This reply was modified 9 years, 11 months ago by
Finance Broker. -
This reply was modified 9 years, 11 months ago by Finance Broker.
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Hi,
I would like to point out a benefit of cross collateralising. If a set of properties are cross collateralised there are certainly cons if property values go down in value. But what if they go up?
No SALE scenario:
If a cross collateralised set of properties go up in value and especially if one of those properties are owner occupied or PPOR then this could possibly be released unencumbered having the other investment properties take on the PPOR debt.SALE scenario:
SIMILAR values or values gone UP:A new property to be purchased be replaced in the cross collateralise to make up for the one sold, through portability of the loan.These options are certainly not viable if you intend to sell a PPOR or IP in the short term. Its more for a long term hold on the properties or if you were certain you could increase its value in the short term. You could upgrade, renovate or subdivide to increase value thus benefiting the cross collateralisation even more.
I’ll give you an example of where I have advised to cross.
A client has 2 properties, 1IP and 1PPOR and would like to buy another IP (construction with hopes to subdivide). They also plan to sell the PPOR in the short term and upgrade. Current structure is this:
PPOR
Loan 1 owner occupied debt
Loan 2 Investment shares debtIP 1
Loan 1 Interest only debtIf the properties are not crossed their new setup in order to purchase the next IP will look like this:
PPOR
Loan 1
Loan 2
Loan 3 – equity releaseIP 1
Loan 1
Loan 2 – equity releaseIP 2
Loan 1When it comes time to sell the PPOR they will most certainly have to pay out Loan 1, 2 & 3.
If they cross collateralise they’re new structure will be this: (i’ve typed this out across but it doesn’t display that way)
PPOR
Loan 1
Loan 2
IP1
Loan 1
IP2
Loan 1 (100%+stamp duty)When it comes time to sell the old PPOR and upgrade they will replace the old PPOR with the new one and may or may not have to payout any loans.
Cross collateralising is certainly not for everyone. It really depends on what your plans are. If you are unsure of this it will always be best to remain uncrossed so your life is less complicated. The question certainly requires more in dept research as to what you plan to do in the future and bad advise can certainly cause you a lot of hassle. Its definitely not a cross or not yes or no straight forward answer. I should note these clients have plenty of equity in their PPOR already and the area they are in are active in terms of sales data. The PPOR has also been upgraded and valued at a good price. This is a very optimal scenario. I’m just trying to point out, dont lose out on the benefits if the structure can help you and not everyone who suggests cross collateralise is the enemy.
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This reply was modified 9 years, 11 months ago by Finance Broker.
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This reply was modified 9 years, 11 months ago by Finance Broker.
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This reply was modified 9 years, 11 months ago by Finance Broker.
Finance Broker
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AMP does take actual repayments into account. I would say there could be other things that could affect your servicing at AMP. Like postcode of the property. If it is in high density or regional areas you could be looking at less rental income taken into account sometimes only 50% is acceptable. This could affect you with any bank however so you wont necessarily be able to fix this by going to another bank.
There’s nothing wrong with Macq trying to win business now. They may have failed brokers in the past but the deals they are offering are good for clients now. So there’s no reason for the client, in this case John, to stay away from them.
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This reply was modified 10 years ago by Finance Broker.
Finance Broker
http://lnkd.in/bXj3RA9
Phone MeGet a comfortable ride down loans lane, with me as your finance broker!
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