All Topics / The Treasure Chest / LMI and Interest Only Loan Question

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  • Profile photo of vluu27vluu27
    Member
    @vluu27
    Join Date: 2003
    Post Count: 59

    Hi all,

    I was just curious. Did anyone know that if your loan is 90% you cant pay I/O. You have to pay P+I.

    I just tried to change from P+I to I/O and got rejected. The reason is that because i need to have at least 20% equity from contract to be able to that. My banker didnt even know that.

    Is it just this the bank I’m with (CBA) or is it all across the board?

    Your thoughts are much appreciated.

    Profile photo of MelanieMelanie
    Member
    @melanie
    Join Date: 2003
    Post Count: 382

    Howdy,

    That does not sound right – made some prelim enquiries and was told that really the only reason for this restriction would be location – if you don’t mind me asking, what is the postcode of the property.

    Cheers,
    Mel
    [email protected]

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Not true of all lenders mate.

    Simon Macks
    Mortgage Hunter
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I personally had 5 loans IO with ANZ at 95%!

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of luckyoneluckyone
    Member
    @luckyone
    Join Date: 2003
    Post Count: 148

    Hello,
    I have one with Westpac that’s IO and that’s at 90%. I think you should try to renegotiate. Say you’ll take you’re business elsewhere if they don’t let you make it IO. Worth a try, you don’t actually have to go through with it.

    Our last bank offered to meet all of Westpac’s features to keep our business but their service was so crappy that we decided it would be worth paying the extra mortgage insurance just to get away from them. Sometimes it’s worth changing banks if you’re not happy with what they are offering you.

    Westpac far exceeds the service we used to get.

    Luckyone

    Profile photo of vluu27vluu27
    Member
    @vluu27
    Join Date: 2003
    Post Count: 59

    Strange Indeed,

    My loan is with the CBA. The postcode is an inner melbourne suburb 14ks from the city. Prices have skyrocketed in Bundoora. Good properties start at half a million now. A half decent one will cost u about 300ks +

    So I dont think its because of the suburb or postcode. When I bought it I got it valuated higher than actually contract price.

    I already signed up with the loan from the beginning. They rang me and told me BECAUSE I had LMI i need to get the loan below 80%.

    HUH?

    vluu

    Profile photo of diclemdiclem
    Member
    @diclem
    Join Date: 2003
    Post Count: 537

    Hold on a minute, I’m in Bundoora. Are you investing in Bundoora? (By the way the postcode is 3083) Or are you looking to live here?

    If you have questions, I’ll be happy to answer them.

    Keep smiling,
    Sue

    Be careful not step on the flowers when you’re looking at the stars

    Profile photo of vluu27vluu27
    Member
    @vluu27
    Join Date: 2003
    Post Count: 59

    Diclem,

    I bought in the Botanica Parks Estate. 4 bedroom. 5 Year old House. Double Electrical Garage. From comparable sales most 4 bedrooms in Botanica Park go for 400k+.

    Secondly I am only buying IPs to invest.

    Do you know how long it took me to lease it out?
    After putting it on the market on realestate.com…2 days later we had a 12 month lease contract signed and delivered.

    So my point is its a boom area great for investing AND I dont understand why the CBA wont give me the IO loan on an investment Home Loan for such a high growth area.

    Strange????????

    Profile photo of diclemdiclem
    Member
    @diclem
    Join Date: 2003
    Post Count: 537

    Yes,vluu,

    It is strange about the bank and their reluctance not allow IO loan. Can’t understand it to be honest. Bundoora has a lot going for it, prices are skyrocketing because the land is nearly all gone. I only moved here 6 months ago (Big move all the way from reservoir!) and the capital growth has been great. Didn’t realise there was a rental demand though. Still you’d need a huge deposit to make positive cashflow.

    Good luck with it all,

    Sue[:)]

    Be careful not step on the flowers when you’re looking at the stars

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