Forums / Getting Technical / Finance / How do others avoid paying mortgage insurance?

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  • Profile photo of Aussie1Aussie1
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    @aussie1
    Join Date: 2010
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    Hi guys

    Im trying to buy my first investment property can anyone recommend any lenders who will not use lmi as we have jobs some cash deposit not enough to take it to an 80 percent lend,and the mortgage insurance are being very hard on us , what is the best thing to do

    mattnz
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    @mattnz
    Join Date: 2007
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    The last time I checked Westpac allowed 85% loans with no LMI.

    Profile photo of Ben KBen K
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    @ben-k
    Join Date: 2010
    Post Count: 103

    the last time i checked, (about 2 wks ago) with the manager of my local branch, that is absolutely not the case…. Westpac are making the slightest of margins on home lends so are being semi conservative, although, if you know a westpac thats doing no lmi on an 85% lend, please point me in the direction!!

    Profile photo of TerrywTerryw
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    @terryw
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    yeah, I think Westpac stopped doing 85% no LMI

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    Profile photo of god_of_moneygod_of_money
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    @god_of_money
    Join Date: 2008
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    Terry
    Have u tried Investec Bank… I heard they are offering up to 90% without LVR
    ANZ used to offer medical practioners up to 95% without LVR

    Profile photo of Sick of SpruikersSick of Spruikers
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    @sick-of-spruikers
    Join Date: 2010
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    You mention in one of your replys that 'you are so far from being a risk'…  aside from APRA rules which govern the banks if you can't put together a deposit towards a property then you have nothing to lose.  I know if I was a bank or lending someone money I'd want to ensure they had something in the deal as well.  By being able to put together 20% of your own money you also demonstrate to yourself that you are able to manage money – which is what you need to do to manage a mortgage.  I started investing in property when I was 19 and on a low income.  This was before first home owner grants and relative to my income property was less affordable then that it is in today's market.  I bought a modest property in a good area and saved up my first 20% by working extra jobs, walking where I could rather than taking the car or transport and strict budgeting.  That obviously involved some sacrifices that none of my friends at the time were willing to make and now complain that they are struggling to pay for one property while I've built a small portfolio.  If you want someone else / the bank to back you then you need to back yourself.  Might sound boring and might mean giving up Friday night drinks and pizza but if you are serious about wanting something bad enough you'll do what it takes. 

    My other recommendation is not to start on the ladder with your dream property – buy what you can afford with your 20%.  I've bought a number of properties in regional areas that have provided sound growth and cashflow over the years each time I had built up 20% in either savings or equity I would buy another (however I'm not solely a regional diehard – the inner suburbs of our capitals are great once you have 20% to go towards them).

    The exciting bit is that once you have done some initial hard yards things do start to roll. 

    Consider also the 20% your buffer in the market – what's the point of investing if you don't have equity.

    All the best

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
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    GOM

    I wouldnt touch Investec with a barge pole.

    They fund their product through Adelaide Bank and it is made up of an interest only loan at standard Adelaide Bank variable rates and then an Investec P & I loan (even if it is an IP) at 2% higher.

    I am refinancing 2 of them at the moment for a Dr / Dentist client and they have been nothing but trouble to deal with from start to finish.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
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    Profile photo of god_of_moneygod_of_money
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    @god_of_money
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    Richard

    Yes.. you are right.. but at least it gives u some option of LVR 95% without LMI. I was being told that it is possible to get 1% disc from Adelaide bank if loan ~1 million

    ANZ used to offer 95% LVR without LMI to doctors…but not sure now..

    I dont think anyone else providing 95% LVR without LMI

    Profile photo of Marty McDonaldMarty McDonald
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    @marty-mcdonald
    Join Date: 2010
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    Westpac canned their 85% no LMI ages ago
    ANZ canned medical practioners package about 2 months ago

    There are still 2 reputable / competitive lenders who offer 85% no lmi on certain deals both are foreign banks.

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    Profile photo of charlie06charlie06
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    @charlie06
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    hi everyone,

    My broker told me that ING will do 85% with a very low rate of mortgage insurance. It costs about $700. You have to be in your job for more than a couple of years and there are probably some other criteria. I’m not sure what they are. I do know the loan amount needs to be 750k or less.

    Profile photo of lifeXlifeX
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    @lifex
    Join Date: 2004
    Post Count: 651

    I think everyone needs to bite on LMI to get started.

    But after a few years the equity in your properties should be enough to set up LOCs to pay that extra 20% and avoid the LMI sting.

    In the long run, the thing that holds you back is actually serviceability.

    Funny, I remember thinking of every idea under the sun to buy property with no money down and now I wonder why I bothered.

    Now it is just a calculation on serviceability which gets easier as rents and inflation goes up.

    Best approach is to buy property with potential and add value. Then equity will abound.

    Or….. just wait. Time will give it to you.

    I would suggest that most seasoned investors aim to gear between 65 – 80%. And never consider LMI.

    If you constantly gear over 80%, you risk giving all your profits to the bank in the form of interest and loan costs.

    Profile photo of keikokeiko
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    @keiko
    Join Date: 2008
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    Who 100% for sure know's which bank will deffinitily go 85% or more with no LMI

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099

    ING bank -will do a “reduced” LMI for LVR up to 85% , but up must be in your current job for more hten 2 years and no default history on your credit file at all.

    AFM – The offer no LMI up to 90% BUT the LMI payable must be under $4380 (meaning the place you buy is under $250k)

    HSBC – From time to time they have deals for no LMI ( did one 2 month ago)- No LMI up to 85% – must be in job for more then 3 years and no default also they will only pay $7,000 of the LMI amount ( you fork out the rest)

    There are 3 more private lenders and a few non-conforming lenders that will do it on a case by case basis.

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    mattnz
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    @mattnz
    Join Date: 2007
    Post Count: 573

    It seems that St George are now viewing rent payments as "savings" towards LVR calculations. It may be worth discussing with them, as you may find that the improved LVR means no LMI.

    http://www.debtdeflation.com/blogs/2010/12/23/loan-standards-drop-to-keep-the-bubble-afloat/

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
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    Matt several lenders have been taking rent payments as evidence of savings for some years now.

    The Dragon has gone the other way and actually tighened up their lvr policy.

    No waiving of LMI there now Wesuck are the big brother.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

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