As the title explains, I own my PPOR outright, its worth about 600k. I am looking at purchasing my first IP, and would be borrowing the lot, ie. loan would be about 106% of the IP value. Will I be required to pay morgage insurance on the IP as I am borrowing more than 80% of its value, or does my PPOR get counted when determining my LVR?
Hi Cadan
No the total LVR is considered when purchasing an IP so LMI will not be payable.
In saying this however i certainly would not be cross collateralising the securities when you buy the IP and would get your mortgage broker to structure the loan so that the IP loan is standalone. You can use your PPOR to take out a Line of Credit and cover the deposit and acquisition costs from here.
Structured correctly you will not pay any LMI yet will still borrow the full 106% you need.
Richard Taylor | Australia's leading private lender
Yes as Richard has said the loan structure is the key in making the savings with lenders mortgage insurance.
Hi Caden,
the long and short of it is; if your happy to use your PPOR as security or releasing equity for deposit plus costs, no you wont be stung with LMI.
regards,
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