[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 24, 2008 - 11:43 pm

Mortgage Insurance might not even apply. In a lot of cases, you can place the loan with a 'Self Insured' funder, and significantly reduce your borrowing costs.
There is certainly more than one way to skin a cat.

If you are looking at a full doc loan (if you are PAYG employed or have Full Financials) then you have to decide how much you want to get the new property and go for it. One option to keep as much money left in your property at the end of the day would be to absolutely max out your existing property, to 90% + LMI in most cases, and use the funds to take out a loan for the new property. The new loan can be done without LMI in a lot of cases (with a Risk Fee instead) up to 95% + Risk Fee.
If you meet the no LMI policy, that alone will save you a couple of grand, and because you are selling your existing property in the very short term, you will be able to abuse the refund policy of the insurers. In most cases, if you pay the insured loan amount out within a short time, you will get a large chunck of your LMI premium back. The more you can borrow on your existing property, the lower the LVR will be on the new purchase, and the more your LMI refund will be.

If your existing property is worth 310k, then you should be able to free up about 49k.
Use your 49k for a 30k deposit on the new place, and keep the change for duties etc, and moving.
You now need a 92% LVR on the new O/O purchase. No worries (Unless you forgot to tell us you are a 7 time discharged bankrupt etc)
Move in to the new place. Sell the old place. Get a refund of 40% of the LMI you had to pay for the increase on your old loan.
Pay any of the leftover cash from the sale back into your loan to reduce the interest and retain as available redraw ' just in case' you need to access it in the future.

That might be one way to tackle the problem, but like Richard and I said, a 'Good' broker can help, and someone that does not think outside the square just assumes LMI is evil, everyone must pay it and everyone needs a 20% Deposit.

If you consider how much more expensive a suitable property is likley to be by the time borrowers save additional deposit funds etc, them most of the time LMI works out to be a pretty good deal.

You just need to learn how to work the system.

Let me know if you want help with the above suggestions.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 24, 2008 - 11:15 pm

It is not really going to make a massive difference what happens to the book, due mainly to a couple of things that any change will incorporate.
Anyone that can take on the book in this market will have funding to do so.
and
If the book remians as-is, changes will be in line with the market (or close to it).

The thing is that even if the most cashed up organisation on the planet bought the book, the rates will continue to fluctuate.
This is why.

Securitised funders are struggling to place bond issues. They are paying a premium of funds (if they are even able to price an RMBS issue to start with), and they have to pass this cost on to borrowers or recall loans.
Securitisation has been a very popular form of funds generation in the past 3 to 4 years, and a lot of institutions are adjusting rates (to various degrees)
Balance sheet lenders have all moved their rates too, even though the RMBS market does not affect their cost of funds.
CBA is almost entirely Balance Sheet Funded, but they have capatilised on market conditions to increase margins. The sub prime events had almost no effect on the CBA's cost of funds. They have simply seen an entire market go up 1%, so they went up 0.75%, make fatter margins and still stay at the pointy end of the field.

If an organisation buys Wizard, they will have the funding in place years in advance. That being said, the rates will still go up if the rest of the market continues to fluctuate.

Find yourself a reliable and knowledgable Human to deal with, and keep your fingers crossed for the market conditions returning to 'normal' in the future.

Best of Luck.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 24, 2008 - 10:59 pm

Not to split hairs with you Richard, but if ANZ insure through PMI, thats not 'Self Insuring'. If ANZ insure through ANZ, that is self insuring.
In  an instance where funders 'Self Insure', they will generally charge a Risk Fee as a substitute for an LMI premium. Risk Fee is usually 30-50% cheaper than LMI.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 24, 2008 - 2:03 am

What you need is a simple Bridging Facility.  This will provide you with a loan that can incorporate all your purchasing costs and property value (of the new property), while you are marketing the existing one. Your capacity and servicing will be calculated on the end debt (ie After you have sold your property and put the surplus funds into the new loan)

This type of loan does have it drawbacks, particularly if you do not sell your existing property, but it would suit your circumstances.

It is easier explained in person, so call or email me for more details if you like.

I hope that helps.

ps – If your existing Broker could not suggest this, send him back to the used car lot and deal with a professional.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 20, 2008 - 2:19 am

It sounds like you need to include a special condition in the contract of sale on your existing property to allow you to rent it back for 3 months, and purchase the new property under an option agreement, so you can agree on a price now, and settle later. The option would allow you to access and alter (under the terms you set down), and you settle on the pre arranged price at a later date. For added security, you could also lodge a caveat over the optioned property for the value of any renovations you pay for, to reduce the chances of you ending up out of pocket.

I hope this helps.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 18, 2008 - 3:48 am

I tried to look at it, and it's true. $12/year. Cool

I wish the site, and it's 6 members all the best.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 18, 2008 - 3:44 am

I haven't looked yet, but it sounds like they have taught a bunch of people how to lose $12 to me.
There are a lot of forums out there that don't chargs? Why should this one. They should encourage people to join, and contribute.

Paying money to join forums seem the reverse of what they are getting at.

I will look at it anyway, but there is absolutely no way I will pay to join.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 17, 2008 - 1:41 am

Unfortunately Matt, this in not true. It is certainly not case by case. The Office of State Revenus has fixed rules, that leave no room for interpretation. There is no 'Case by case'.
Also, the quality of the answer is relative to the quality of the question. If you got different answers, you are not asking the right thing? I would also reccomend asking the 'right person' ie someone that actually knows. Why ask an accountant, or a solicitor for that matter?
Call the Office of State Revenue and ask.
You don't ask a dentist how to fix your car, do you? Why ask an accountant a FHOG question?

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 17, 2008 - 12:23 am

The short answer is YES.

It is OK to set up witht he Trust structure, as Trusts are not eligible for the grant. As long as the trust is the Title holder (or the Trustee a.t.f The trust), then there is no way you could have previously applied for the grant and thus you are still eligible.
The same goes for the overseas property. The Australian First Home Owners Grant is a one off payment, and will only apply the first time you (as an individual) appear on the title of an owner occupied property in Australia. (You are also eligible for the grant if you purchase a property and rent it out immediately, as long as it is your intention to Occupy the property within 6 months of purchase).

I hope this helps.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 16, 2008 - 6:23 am

The EFM is a great product for certain situations, and has been thoroughly set up to be flexible and fair.
In the above example, Richard, if you were to take a 20% EFM then Rismark will actually be entitled to 40% of the capital growth in value, and you rightly quoted they will also reduce the original loan by as much as 20%. The operate on a 1-2-1 rule.
10% EFM – 20% share of capital growth – 10% capital reduction
15% EFM – 30% share of capital growth – 15% capital reduction
20% EFM – 40% share of capital growth – 20% capital reduction
The big drawback of the original scenario (to free up cash flow) if that the effect of this can be diminished if Owner Occupied property is currently on I/O, as the term loan that comes along with the EFM is P+I only, and currently going for around 9.54% var.

Ideally, it is great for situations like above, where wife stops work to have a baby etc, of if servicability is tight and family needs to up-size house etc. Rismark are alos starting to predict an end to this product within the next 3 6 months, unless additional funding is sourced.

Overall, it is pretty good if used in the right way.

I hope that helps.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 15, 2008 - 3:38 am

Richard,

CC had some massive securitisation issues late last year. Fortunately, a lot of the loans they wrote were 3 yr Fixed.
Mid June, they issued a notice to all their existing variable clients notifying them of a 0.9% increase to Full Doc loans, and a 1.95% increase to their Horizon loans (which takes in Maxi 90% Lo Doc and Maxi 80% No Doc.
They were also big on using MGIC for LMI purposes, as their credit team had a DUA (Delegated Undewriting Authority) to sign off LMI in house.
A large portion of the displaced clients will have nowhere to go, as they did not fit GE PMI policy even back then. I think it is disgusting, and the ACCC and ASIC are investigating.

The killer blow is also that mostly, their DEF's are 1.9% (Full and Lo Doc).

Bummer for the clients in the middle of the entire fiasco.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 14, 2008 - 4:26 am

Nolapola,

It sounds like a pretty specialised security, but not out of the question to get the finance approval on. Firstly, as an income producing Rural property, you can absolutely forger any normal residential mortgage.
What you are looking for is a specialised financial facility based on not only the security itself, but probably the cash flow position of the ongoing business too.
This will require a combination type of facility for the LVR you are trying to achieve. 1st/2nd combo or similar, depending on where the security is and the other specifice of the transaction.

If you would like some additional info, feel free to email me at the address below and I will be happy to help.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 10, 2008 - 5:16 am

Angela,

If you would like to email me some basic information on your current rate, lender, when your existing loan settled and your income (both gross and taxable), I will be happy to provide you with some assistance.

Have an enjoyable day.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 10, 2008 - 1:09 am

Paul,

Like Richard said, a quick call to the bank will alwasy help. However, if you had the property for more than two years, neither of the Two MAIN mortgage insurers (PMI and Genworth) will provide any rebate. The refund applies only within the first two years.

Best of Luck.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 10, 2008 - 1:02 am

I am a big fan of this forum, but I don't think I have come across a thread where so much bad advice was given in such a short time.

Cash flow projections?

NO Bank will lend you money. They will consider 80% of the value, less debts?

James,

For your own safety and financial interests, forget pretty much everything that was just told to you.
You and your partner do not have to waste your time doing any kind of cash flow projections or similar analysis. Why? Because they use a fixed 'Living Cost' and Expense servicing calculator to asses your ability to repay, and no cash flow projections will change that. If you pass, all good. If you do not service = No Loan.

Also, the bank (assuming you are Full Doc) will lend you up to 95% of the COMBINED value of the security offered.

Marc's comment is completely incorrect and ill informed.

If your current property is worth $300k, your useable equity is 80% of this = $240k.

This means the banks will let you access 80% of the property's value for more investing, less any existing loans, and this is subject to loan serviceability.

You might pay a risk fee or mortgage insurance, but you are quite able to borrow more than 80%. It is a matter of how well you feey you are buying, and your level of comfortability in the debt.

Also, Marc's comment that no bank is also completely incorrect, considering he has no idea (clearly) how much rental income you might get from your potential purchase. I personally have several clients that have properties valued at 300,000 that rent for $575 – $625 per week. This would considerably assist you in setting up a new loan.

My opinion is that you should work within your comfortability level, don't over extend yourself and try to buy well.

As for the advice from the others, I think it speaks volumes for why some people think poorly of Brokers.

I wish you all the best.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 10, 2008 - 12:45 am

Matt,

I understand what you are saying, but the discount is only a special promotion and may end at any time.

Your point is valid though. Thanks for your feedback.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 6, 2008 - 12:27 pm

Richard and Shaun are right. Your broker should have been able to offer you a couple of different options.

If you would like to find out more, just email me and I will be happy to provide you with an idea on how to solve your issue.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 6, 2008 - 12:22 pm

There are a few things you need to consider here.

First thing first. If I am not mistaken, and you are in WA, then it is a legal requirement that the broker doing your finance is Licenced under WA legislation.
Second, if this is the same property as the one in your 'subdivision costs' post, then 14 lots is going to be a bit hard to sneak in as a residential security.
Thirdly, and I dont mean to rain on your parade, but most commercial funders (Even Bankwest) are not too interested in funding anything in WA got the time being, and probably for a while yet. You will probably have to go private money.
The best thing you can do is a brief fesibility, and get it to a Broker that can place it for you. If you dont have a fesibility and a very clear dollar figure you need in mind, you really don't have a project yet.
How much is the security worth – As is? No DA? With DA. How much do you need to get the works in place etc etc.
If you require further assistance, I can certainly assist you to get the info together.

Best of luck.

Tim

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

July 6, 2008 - 12:05 pm

LOL. Richard might have been a gardener in a past life. Batten down the 'hedges' must be a flash back of some kind.
I believe the term you were looking for is 'Batten down the Hatches' , Rich.
 Anyway Angela, if you are looking for something a little more definite than 'still just about available', then I am also happy to give you a quote for some Lo Doc alternatives. At 8.77, I can only imagine Richard is talking about the MAV Plus Commonwealth Bank product, and you would need over 750,000 total borrowings just to qualify.

Anyway, no harm in shopping around. Email me at [email protected] and I will be happy to assist.

[MortgagePlusMember@mortgageplusJoin Date: 2008Post Count: 83]

June 19, 2008 - 4:58 am

Neil,

Its great that you are asking for feedback, and I can only offer my opinion just like anyone alse.
It seems that you are trying to structure a seminar to train Mortgage Brokers, not investors. What you want to generate is a room full of people that are keen to go out and purchase property, and come back to you for the finance.
Your topic list of –
How to finance this,
how to finance that…..
how to structure the deals etc etc is YOUR JOB. That is where YOU add value.
If you are going to compete with the likes of freelance Brokers in the market, you have to offer a service to your clients. I don't for a second put any weight in the offerings of Refund (or anyone that does a comission rebate) as it simply means you are getting a second rate broker that is willing to settle for second rate comission.
Good Commercial Brokers charge 1-2% plus GST on a transaction. On a deal for 5mil, that is a Mandate on the deal that says 'client pays 55,000 for broker service'. And good brokers earn it.

Never mind the ins and out of the investor finance. Get your room full of investors, and teach them things like –
Where to find growth in a slow market.
How to use innovative loan products to build cash flow
5 things to look for in a potential property.
Yeild? Are you really investing?
etc etc.
Get them excited to go out and buy property, then add value by setting them up with great loans and structures.

Just me two cents.

Good Luck.

Tim O'Shea
Mortgage Plus
0419 774 487