Hi,
I’m a mortgage broker in Adelaide, and I need some ‘creative’ assistance from other brokers on the forum, please.
I have a client who has been steadily buying rental properties in the northern suburbs of Adelaide for the past 2 years.
Now he’s decided to purchase 23 at once, with staggered settlement dates, all at 75-80% LVR. I have two problems:
Problem 1: He’s buying as trustee for his own Trust. Not many lo-doc lenders will lend without ‘personal borrower’ only. I’ve eliminated those who will not lend outside this rule.
Problem 2: His income + rentals no longer services the full debt. He has asked to go lo-doc, (as he has no current financials reflecting hisnew +ve income). This should be no problem. The real problem is: most lo-doc loans are mortgage insured.
So…
I’ve broken down the purchases into separate loan amounts to get a couple of lenders under the max 75% LVR to avoid LMI – but I still have to fund another $1.8 million through mortgage insured lenders.
By the time I spread this guy’s exposure around, one of the insurers is telling me he’s over-exposed to them, and they won’t forward any further funds. The other has set a dollar limit of $600,000 total borrowings per client.
I’m stuck for suggestions of where to try next. (Yes, i’ve tried the non-conforming lenders, too)
Any suggestions would be greatly appreciated
Lea
Remember: This post is just my ‘two cents’ and should not be construed as legal, financial, investment, taxation or even general advice in any way. Always seek independent advice pertinent to your OWN situation before jumping into the deep end.
Keep in mind there are only 2 LMI companies left. 3 if you count the in-house one that St George use.
Have you tried some of the solicter lenders…however. I think they would struggle with teh 75-80 LVR’s.
Thanks for the suggestion Nat. I’ve maxed out GE and PMI. I’ve also found two regular banks at 75% with no LMI. (ABL and ING)
I’ve used St George, but at a 65% LVR client is not thrilled. He wanted higher LVR’s.
I’ve got two non-conforming lenders thinking about it – but again, GE won’t play, coz of the MI already involved. Again, client is not thrilled about non-conforming lenders and their higher rates – he says it eats into his +ve profits and would prefer not to use this path.
I’m thinking he doesn’t have much choice.
[
]Lea
Remember: This post is just my ‘two cents’ and should not be construed as legal, financial, investment, taxation or even general advice in any way. Always seek independent advice pertinent to your OWN situation before jumping into the deep end.
Lea,
Give me a call, I may be able to help you get a Low Doc in a Trust, 80%LVR no LMI for your client.
Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Hi Lea
I’m a bit confused.
You say “his income + rentals no longer services the full debt“.
Don’t you have a legal and ethical responsibility to ensure your client can afford the debt before helping him?
Cheers
Stu
I assumed you meant “his current income + renatls” but his future income plus rentals will cover the repayents.
You’re not going to get too far with standard low docs. GE has a maximum lend or $800,000 per borrower and PMI $750,000 per borrower for total loans when using a low doc. So that is about $1.5 mil in low docs. if you already have loans mortgage insured, these count in that total.
Then there is ING, who do low docs without LMI at 75%, but no companies or trusts. But if he is trustee (ie not a company) he may be able to get thru.
Adelaide Bank also do Low Doc loans without LMI at 75% or less.
There are the other lenders such as Magney Mortgages etc, generally LVRs are around 66.6%
Then there are many private and other lenders who will lend up to 80% LVRs at higher rates (8 to 12%), without too many questions.
You also have the options of second mortgages taking the loans up to 80% LVR as well.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by Terryw:You’re not going to get too far with standard low docs. GE has a maximum lend or $800,000 per borrower and PMI $750,000 per borrower for total loans when using a low doc.
I’m in South Australia. GE and PMI have lower limits for us than for you guys in the eastern states. I’m maxed at $700,000 GE and $600,000 with PMI
Then there is ING, who do low docs without LMI at 75%, but no companies or trusts. Adelaide Bank also do Low Doc loans without LMI at 75% or less.Used both ING and ABL already – but thanks!
There are the other lenders such as Magney Mortgages etc, generally LVRs are around 66.6%. Then there are many private and other lenders who will lend up to 80% LVRs at higher rates (8 to 12%), without too many questions.Finalised and submitted last parts of this loan this morning, using two private lenders, two non-conforming lenders.
But thanks heaps to all those who responded. I appreciate it.
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LeaRemember: This post is just my ‘two cents’ and should not be construed as legal, financial, investment, taxation or even general advice in any way. Always seek independent advice pertinent to your OWN situation before jumping into the deep end.
Stuart Wemyss wrote:I’m a bit confused.
You say “his income + rentals no longer services the full debt“.
Don’t you have a legal and ethical responsibility to ensure your client can afford the debt before helping him?
Yes, Stu. I do.
His 2002 financials show that his taxable income is not as high as his 2003 financials will be. As the servicing calculations are being done by the lenders using these 18 month old figures, of course the numbers show that he couldn’t afford the repayments using those figures.
His accountant has not completed his 2003 financials as yet – but when he does, my client will more than clearly be able to service this debt without problem.
I hope this eliminates and alleviates your resultant confusion.
Lea
(who is very aware of her legal and ethical obligations to her clients at all times)Remember: This post is just my ‘two cents’ and should not be construed as legal, financial, investment, taxation or even general advice in any way. Always seek independent advice pertinent to your OWN situation before jumping into the deep end.
Why not just approach the vendors to vendor finance 10 or 30%. If they say no, pay them another grand or two. Could work out cheaper than paying for LMI, etc. If you could have a few vendors who own their house, they might even lend 80% -might be retirees wanting regular income
Have 14 properties over 4 lenders 85 80 75 % lvr up to 2m leveraged
Liberty fin low doc 85% lvr 9.25% 80% pepper home loans 9.05% bluestone 75% all these are self mortgage insured outside ge to up your leveraging email if i can help further
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