Increase portfolio by 170% instantly with LMI.

Viewing 9 posts - 1 through 9 (of 9 total)

lifeX
Member
@lifex
Join Date: 2004
Post Count: 651
February 1, 2005 - 9:26 am
I am considering refinancing my portfolio to a high LVR, using Lenders Mortgage Insurance.
Correct me if I am wrong. If I am charged 1.5% LMI to access an extra 10% (new LVRs of 90%) on my exisiting portfolio.
Then for every 100 gorillas of property I own. I should unlock the deposit in the form of a LOC for another 8 & 1/2 gorillas and spend 1 & 1/2 gorillas (blood everywhere……eeeew) on LMI for more property to the value of 70 gorillas.
I can increase my current total property portfolio at 80%LVR by 170% at a cost of 3% LMI + refinance costs.[devil]
What are your thoughts on this?
Live, Learn and Grow
Lifexperience
Bonbeach
Participant
@bonbeach
Join Date: 2004
Post Count: 214
February 8, 2005 - 11:49 am
makes sense… as long as you can SERVICE the loan/s… [cap]
byronent_2
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@byronent_2
Join Date: 2004
Post Count: 337
February 8, 2005 - 11:53 am
You lost me on the first gorilla
Byronent
Adelaide SA
Bonbeach
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@bonbeach
Join Date: 2004
Post Count: 214
February 8, 2005 - 12:13 pm
maybe you need to repeat the scenario using ‘widgets’
hehe [biggrin]
byronent_2
Participant
@byronent_2
Join Date: 2004
Post Count: 337
February 8, 2005 - 12:23 pm
i would prefer in dollars.
Byronent
Adelaide SA
calvin_thirty4
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@calvin_thirty4
Join Date: 2004
Post Count: 556
February 9, 2005 - 3:33 am
You get two Chimps for every Gorilla!
So you’d actually pay 3 whole chimps and gain 17 chimps worth in IPs.
Is ‘multiplication by division’?[grin]
Cheers
C@34
Dardi
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@dardi
Join Date: 2005
Post Count: 11
February 10, 2005 - 2:21 pm
I think you’ve all had one to many bananas
Dardi
Greg F
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@greg-f
Join Date: 2004
Post Count: 83
February 10, 2005 - 10:39 pm
Originally posted by lifeX:
I can increase my current total property portfolio at 80%LVR by 170% at a cost of 3% LMI + refinance costs.[devil]
What are your thoughts on this? Lifexperience
Hi LifeX
I’ve done very well over the past couple of years by increasing my LVR (otherwise known as “due diligence gambling” [biggrin]) so I could buy more property. I’m comfortable because:
1. It’s a short term strategy
2. I have a concrete plan in place
… to quickly rebuild my equity back to more comfortable levels.
It’s not that I’ve just benefitted from the recent boom. I did benefit, of course, but I’m still buying. As long as you feel confident you can “do things differently” (thanks Steve) by adding value with your knowledge / experience / local knowledge (and I know you can do this LifeX), then I say GO FOR IT.
Cheers
Greg
Ibuycashflow
Participant
@ibuycashflow
Join Date: 2004
Post Count: 274
February 11, 2005 - 11:46 am
You might have lost me on your figures
Property value $100k
Current Loan 80k (80%)
Use LMI to goto 90% gives you an extra $10k for a deposit.
Cost of this is 1.5% or $1.5k leaving a net of $8.5k
Deduct another $1.5k to goto 90% of new IP leaves net $7k. This means you can spend upto $70k.
I think you’ve increased your portfloio by 70% and not 170% (ie Gross value rises from $100 to $170)
As long as the new IP’s have good enough cash flows just sit back and let inflation take its course.
Cheers
Jeff