Forums / Property Investing / Creative Investing / 95% LVR Wrap refinances!

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  • Profile photo of TerrywTerryw
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    @terryw
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    It seems Liberty Financial will now consider refinancing “wrap” loans. Below is a quote from an email earleir today:

    “Also are you aware that Liberty will consider paying out Wrap Mortgages at the current value of the property to an LVR of 95% on a full doc basis, we will also consider applications on a low doc basis up to an LVR of 90%. If the borrowers have a clean credit history we could consider putting these borrowers into our AAA product at an interest rate of 6.94% for full doc and 7.54% on a low doc. Maximum lend on a low doc basis on the AAA is 80%.”

    Terryw
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    Profile photo of Richard TaylorRichard Taylor
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    Hi Terry
    Thanks for the interesting post.
    We have used either NAB or Adelaide Bank for our wrap refinances both of who in the past gone to 95% LVR but Livery is certainly another avenue with its flexibility.

    Cheers Richard [email protected]
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    Profile photo of kerwynkerwyn
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    @kerwyn
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    Hi Terry
    Thanks for the info. I am looking at doing some wraps in QLD soon and heading that way in July to have a look. Will be in touch if it works out.
    Kerwyn

    Profile photo of Nat RNat R
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    @nat-r
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    I read that as Liberty will look to refiance the punter (tennant) out of the wrap loan he is currently in and across to a traditional loan with his name on the contract.

    Profile photo of Robbie BRobbie B
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    @robbie-b
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    There is nothing special about refinancing a wrap. All lenders will do it under normal lending criteria. The problem lies with the initial funding to offer a property as a wrap.

    TMA


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    Profile photo of TerrywTerryw
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    @terryw
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    TMA. The trouble is the mortgage insurers do not like wraps so will only lend based on contract price, not value.

    Terryw
    Discover Home Loans
    North Sydney
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    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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    Profile photo of Robbie BRobbie B
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    Of course they will lend on contract price. Isn’t this when you would refinance a wrap? When the contract price is less than the value?

    Also, there may be some difficulty if they do it early and the contract price is substantially higher than the value. I can’t see any lenders lending in this situation either. LVRs have to be right.

    TMA


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    Profile photo of FWFW
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    @fw
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    TMA
    Yes, they lend on contract price. Only problem is, that’s not much use when the house is worth a lot more than the contract price. I can understand sticking to contract price when it’s just been sold, but when it’s a few years later, surely common sense suggests the house may well have changed in value. My first wrappees got stuck with that – in the time they’d had the house, plus their hard work, the house was worth at least $30k more than their contract price.
    They had to go to a lender who self insured to get around it.
    Mind you, we are talking about mortgage insurers here – I don’t know that common sense comes into the equation at all!

    Keep smiling
    Felicity 8-)

    Profile photo of Robbie BRobbie B
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    This should not be a problem if the contract date is more than 6-12 months ago depening on lender.

    TMA


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    Profile photo of TerrywTerryw
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    Unfortunately it is still a problem – at least with one of the mortgage insurer – PMI.

    Terryw
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    Profile photo of Robbie BRobbie B
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    PMI have never stopped deals going through based on LVR using current value for anyone I know. I think their minimum is 12 months though.

    TMA


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    Profile photo of kendo5181kendo5181
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    Quote:
    Originally posted by Terryw:

    TMA. The trouble is the mortgage insurers do not like wraps so will only lend based on contract price, not value.

    Hi Terry, does this mean that in a strong market after say 5 years when the value is significantly higher than the contract that mortgage insurers still go only off te contract, even if LVR may be 60 or 70%?

    Profile photo of TerrywTerryw
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    @terryw
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    Kendo

    Yes, that is what happened to one of my clients.

    But things in finance change rapidly, so this policy may not be around. The good news is that if the LVR is 80% or less, the banks can do it without insuring the loan, so can get around this LMi hurdle.

    Terryw
    Discover Home Loans
    North Sydney
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    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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