Hello bigmark,
There are short-term private finance options. I have a business colleague who offers finance for 3-4 months terms at around 15-20% p.a. depending on risk. Usually she prefers 1st mortgages but can look at 2nd mortgages behind your existing lender as long as there is enough equity in your property. Obviously pretty risky if you don’t sell but if you are interested I can give you her details.
Just shoot me an email:
If you would consider living at the property then Pepper home loans would offer you a 100% home loan at 8.45% (owner occupier only). They charge a 1% settlement fee instead of LMI.
Yeah sorry,[blush2]That’s right. Just get a seperate LOC with a limit of your choosing assuming it can service and you don’t end up borrowing above 80% i.e a LOC with an $84K limit.
Hello DAAJ,
You can’t fix the rate on a line of credit. It is always variable. The reason is that a LOC balance is always changing depending on how much you deposit into the LOC and how much you withdraw (like a large credit card you simply have a limit i.e. 80% of the security property value). If a LOC was fixed there would be no guaranteed return for investors purchasing fixed rate mortgeg bonds – because the income would vary depending on how much of the facility was used by the borrower using a LOC i.e. the balance. If the balance was only $100K but the linit was $200K, there would only be half the return. But the investor is supposed to be guaranteed a return on the full amount invested. Therefore this would not work.
This is my understanding anyway…
Hi Newgen,
Don’t attempt to have all your loans cross-collateralised with a new lender and mortgage insurer. If you do, your total borrowings would exceed $500K and this can be difficult and expensive. (it would only assessed on a case by case basis – in other words other factors must be strong i.e. income, stability etc.
But the killer would be the LMI premium!! If you are not contributing any further funds other than ‘equity’ the overall deal would be above 90% which one mortgage insurer would charge an LMI fee in the vicinity of $15-17K. [8]
Even the MI on the refinance of your existing loans up to 95% only, would attract between $10K – $12K LMI fee. Better though I suppose…
I would do one of two things.
1/ ask your existing lender – if you refinance up to 95% of your current properties, how much extra LMI would be payable above and beyond what you have already presumably paid when you originaly purchased/refinanced?
2/ try to save the 3-5% of the purchase price + costs on the new purchase of $250K then LMI would only be $4K-6K.[]
Hi Ronkaye,
I am a mortgage broker on the Gold Coast. If you like to discuss it face-to-face, my time is free. I could check which lender would be most suitable for you for your circumstance.
Regards
MortMan [email protected]
There is one lender at the moment that will offer 100% offset accounts on all fixed rate products 1-5 yrs. I.e 3 yrs at 6.85% with full offset. Very flexible product indeed at very !
Just email me if you would like to know more. [email protected]
Based on what an accountant told me, I think it must be a misprint, or the author is not clear in her writings. It should say something like:
2. You can’t use interest as a tax deduction if you are already living in the property yourself.
It’s like people who have a holiday house and live in it for 4 weeks of the year, therefore don’t get expected market rent returns per annum, and claim the rent minus interest loss on the investment. The loss only occured because they chose not get rent (while they lived in it).
If people find it difficult to get finance on these and if no owner-occupiers can buy if they are under 55, then with this greatly diminished demand I wouldn’t be expecting much capital growth at all…
I think wrapping is fine as long as it is done ethically – sure we’re here to make money but if you do it at other’e expense you guaranteed a bitter life in my opinion.
When considering wrapping all parties must know exacly what they are getting into – i.e. independent financial advice is a must. It might well be a mutually beneficial arrangement – and then everyone’s laughing!
So let’s get perspective in this arguement please.
Hello Phobia, 2muchmoney and littlelot…
I also live on the Gold Coast and would like to join your club if you are setting it up. I have 2 properties and am looking at incresing this with some good ideas…please let me know my email is [email protected]. Or just reply and give me the details…
Mortman
I reckon if you can afford fluctuations in interest rates and your not absolutely 100% sure you’re going to stick to your loan and lender for the fixed rate term, then go variable.
Nothing worse than being stuck with an inflexible fixed rate loan that costs you heaps if you want to change anything. I had a mate who sold his property 2 years into a 5 year fixed loan and paid $22K in break fees! Worth paying an extra $50 a month in extra interest if rates go up I’d say…that way you always have options with your gearing!
Hello Jerome,
What about increasing any existing property loans you may have and thereby release equity for ‘investment’ purposes? Just an idea.
Mortman
Hi,
I live on the Gold Coast and the market has been booming for around 3 years. As a Mortgage Broker I keep pretty close to many R.E agents and valuers. Just this week I have been told that some listings are overpriced and are sitting.
To give some perspective, vendors in the last 2 years have been putting premiums on their expected price and getting it with interstate investors. Then locals see the market trend and buy up too – almost at any price! But now it seems to be slowing down as these premiums (sometimes up to 20% above market average) are not being achieved on already top prices. So non-locals will need to do their research now in order to ensure they are getting a fair deal.
As for the medium term future, the market is expected to continue to grow. Population growth and as lifestyle seekers continue to enter the SE QLD market, and this will mean that demand will be present. You probably won’t achieve the same growth though as has recently been achieved.
A good loan overall because you can separate the debt into sub accounts all under one pre-approved limit i.e. owner occupied debt, investment debt, personal credit etc and manage what you want to pay off first. Might be god for tax purposes but…
The thing I don’t like about the St George portfolio is that there is a $12 p/m fee for every sub-account (unless salary credit into sub account). That can get expensive.
A good feature is there is 8 free transaction every month.
It is a competitive loan when you take the professional package (based on limit set) but it is not the most competitive line of credit available when you borrow over $250K as you only get .5-.6% off the current rate of 6.67% (depending on where you are). These discounts were recently reduced.
The thing with busts is (if it is going to happen) is that they are short term. Historically the time over which property prices decrease is comparitively short i.e. 3-4 years.
So it’s important to get some perspective with this, think about your individual strategy.
Like shares if you plan to hold for the medium to long term, in a good location, it doesn’t matter when you buy or sell, because for the majority of the time you’ll be in the market when it is rising. All you really need to do is make sure you are not over extending yourself, and you are confident in your financial situation. That way you never need to sell in a hurry and you can wait out any downturn.
Ofcourse it is different if you are speculating for the short term…
Hello,
I don’t know a broker in Emerald, however as a Mortgage broker in QLD I can give them some advice about what their options are.
Basically I will need to know:
What incomes are they on?
What type of employment have they got? i.e FT, PT casual or Self-empl.
How long have they been employed in their current role?
What funds do they have to put towards the purchase?
What other financial commitments do they have?
What is the expected range for the purchase price?
If you don’t want to put up these details on the forum – just shoot me an email at [email protected]