All Topics / Finance / Landlords insurance on commerical and LVR

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of castoncaston
    Participant
    @caston
    Join Date: 2005
    Post Count: 58

    Hello,

    If I take out landlords insurance am I likely to get a higher LVR on commercial?

    thanks,

    Chris

    Profile photo of grossrealisationgrossrealisation
    Member
    @grossrealisation
    Join Date: 2005
    Post Count: 1,031

    not sure why you think you will get a lower lvr because of insurance.
    The insurance hasn’t got anything to do with lvr.
    Lvr to me is loan to value ratio.
    Ie value of property and the loan being a portion of that value.
    Insurance can be the replacemant value but this will not change the lvr.
    Currently lvr on commercial lending is normally 60% and is across the board.
    I have got it to 70% but combined with residential lend and some private lending.

    here to help

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I agree with Gross, the two are completely separate ‘things’, not affecting each other.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Profile photo of castoncaston
    Participant
    @caston
    Join Date: 2005
    Post Count: 58

    The idea of the insurance is to mitigate the risk of a situation arising in which you can’t make the repayments.
    For instance if a tenant suddenly goes insolvent without warning and can’t pay the rent.

    Surely if your insurance mitigates certain risks then your loan should be seen as less risky and you should be able to command a higher LVR.

    I got the idea because a bloke I spoke to on the slashdot meet said he was able to pay 5% deposit on his first home instead of 20% as he paid for $3000 in mortgage insurance.

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    Hi Caston,
    The insurance your friend is referring to is LMI (lenders mortgage insurance) this insurance is applicable on most residential lending where the LVR is over 80%, this is not to be confused with landlords insurance, Cheers.

    Regards
    Steven
    Mortgage Broker

    Mobile Mortgage Market
    Ph: 0402 483 216
    [email protected]
    http://www.mobilemortgagemarket.com.au

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    LMI = LENDERS Mortgage Insurance

    It is a one off premium you are charged usually when borrowing more than 80% of the value of the property and is to cover the LENDER if you default. The LMI company will then pay the lender any shortfall and chase you for the funds.

    Landlords insurance is another insurance you will also have to pay for and covers you for vacancy of the property.

    You are right though… LMI lets you borrow higher LVRs. You just had the name mixed up. Unfortunately, LMI does NOT apply to commercial properties. It is only for residential.

    TMA


    http://www.email4money.info
    Investor Links
    First Home Buyer Website


    Profile photo of castoncaston
    Participant
    @caston
    Join Date: 2005
    Post Count: 58

    Thank you. I’m still learning after all.

    Sounds like a bit of a heist though. Does the LMI company charge you interest on the money if they have to chase you up?

    I’d rather put the money aside into a managed property trust (that pays you dividends) and that you can sell if things go pear shaped but I guess lenders call the shots.

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    Yes they do. They also add all other expenses associated with selling you up if it is not covered by the sale. This should not be a problem though as no-one plans to fail.

    TMA


    http://www.email4money.info
    Investor Links
    First Home Buyer Website


    Profile photo of JKMJKM
    Member
    @jkm
    Join Date: 2005
    Post Count: 82

    Just a quick note too, you actually can’t get landlords insurance on commercial property.

    Courage is not acting without fear but acting despite your fear.

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