Forum Replies Created
Hi,
To narrow down the selection criteria, I like to look at the comparison rates for each loan that I am considering. Comparison rate legislation came in here in Qld this financial year. If you don’t know what a comparison rate is it would be worth while having a read about them. There are a lot of articles around at the moment that go into details. Be wary though that comparison rates do not include unforseeable charges that may be associated with a loan. eg a fee for redraw.
From there, I look for the features in the loan that I need/ will use (so that I am not paying a higher interest rate for features in a loan that I do not need).
Be careful of fixed rates. Usually there will be a break cost if you refinance part way through the fixed term; and usually the expense is greater the longer you have left to run on that fixed term.
Hope that helps a bit.
May good fortune befall you! Happy investing.
Nathan.
[
]Hi Nick,
Terry is spot on!!! The premium that you pay for LMI is a scale from 80.01% to 97% +. LMI is calculated as a percentage of the loan amount. So the premium that you pay is relatively cheap in the low 80%s[
] and can be very epensive at 97%!!.[] Obviously more risk to the insurer as your deposit decreases.There is also a difference if the lender you are using is a securitised lender or a balance sheet lender. Won’t go into the definitions here. LMI premiums are also reveiwed every 6 months or whenever the LMI market changes (Royal Sun Alliance has recently been down graded and has droppped off the shopping list leaving PMI and GE as the only alternatives.
To give you a guide, I have seen premiums at around 0.21% plus stamp duty at 80.01% loan to value ratio to 3% plus stamp duty at 97% loan to value ratio.
Cheers and happy investing. May you LMI be cheap!
Nathan.
Will be good to see the faces behind the typing!
See you all there
cheers and happy travelling,
Nathan.[
][][]Hi,
Lenders look at two main things when it comes to approving a loan. 1. Equity/ Deposit. 2. Capacity.
You may have money/ assets /equity in abundence, but if you cannot show that you are capable of repaying the loan, you will struggle.
Do you have any other sources of income other than unemployment benefits?
There are more flexibile loans out there/ and more flexible lenders, but be wary of the position that you may be in if you run into a long vacancy periods, a rise in interest rates etc.
cheers,
Nathan.[
]Hi Nick,
It is always handy to have the ersidex report before you start negotiating, but having said that, it you have done your due dilligence, and the cashflow looks good, I would not be overemphasising the purchase price. If you are obtaining finance, ask them to do a full valuation on the property. (Hopefully the offer is subject to finance.)
I would me more worried about inheriting a troublesome tennant than the property purchase price from what you have said.
Good idea to do due dilligence on the tennants as well as the property!
Cheers,
Nathan.[
]My pleasure!
thank-you for the thank-you.
All the best for your investment ventures
Cheers,
Nathan.[
][][]Hi Mouse,
Institutions look at two main criteria when you apply for a loan. Capacity/servicability and Equity/Deposit. These are the limiting factors when you are trying to expand your portfolio (before being maxed out & using Steve’s advice).
The capacity/servicability side of things is all about the question of what size loan can you afford with the income you have, and your current debt commitments. By increasing your income, or the more likely reducing your debts, your potential maximum loan amount increases.
The second criteria is equity/deposit. Great borrowing capacity aloan does not ensure a loan approval. You have to make sure that you have enough deposit, or equity to draw on to cover deposit + costs of these property purchases.
The weaker of these two will ultimately be your limiting factor before looking at accounting structures.
Two last things to mention:
1) Although you are hoping to pool resources with your family, it may be worthwhile looking at your maximum borrowing capacity as individuals (sometimes it is higher this way).
2) Institutions use a servicing interest rate higher than the current interest rate to qualify customers on their maximum lending. ie a banks standard variable rate may be 6.57%, but to qualify a customer for a maximum loan amount it may be 8.07%.
This is only done for internal loans. So if you were to spread your loans with a few dirrerent institutions that would increase your maximum loan amount from a capacity perspective. Also be aware that some institutions are more liberal than others with the amount of lending they will offer.
Hope this is of some value to you.
Cheers and happy investing,
Nathan.[
]your positive attitude fills me with joy and happiness!
[
][][][][][8D][]Cheers, and keep up the good attitude
Nathan
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Cheers,
Nathan.
Hope the tune up makes you feel as good as new!
Here is to a speedy recovery,
Cheers, and happy resting,
Nathan.[
]Hi Grizzly,
Checked out their web site. What sort of fees do they charge and how do they select investment properties for you? Brisbane is a big place!
Cheers,
Nathan.
[]Hi Prado,
settlement is the answer!
That was quick and easy!!
Cheers, and happy investing,
Nathan.[
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] Obviously more risk to the insurer as your deposit decreases.
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A practical guide for profit in property investment
