Hi forumites,
I'm about to buy IP#1. Fortunately we have enough saved to pay a 20% deposit (looking at buying in the $450k-$500k range).
However my broker has told me that we can choose the 90% LVR option (10% deposit), in which case we'd have to pay LMI of $11.5k! Ouch!
I know that if we take the 90% LVR option we'd be able to buy a 2nd IP sooner, while taking the 80% LVR would save us $11.5k but then we couldn't buy for a few years at least.
Any ideas?
Cheers
Buy in New Zealand, no LMI, no capital gains tax, no stamp duty.
Why pay for something you don't need? When the time comes for IP#2, use your line of credit or equity in P#1 to fund the deposit.
You may be able to add the LMI to the loan so there is no upfront cost – but more interest in the loan run. This could enable you to buy more or stretch your money further.
On the other hand, $11k is a lot of money how much extra is the extra 10%? maybe work out what the return would be if you invested $x in the property (ie paying more deposit) you would 'make'' $11k.
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
Thanks all. I think we'll go for the no LMI option. We're still young so our incomes are still going up – should be able to save up another deposit easily or pull the equity out from our PPOR and refinance.
Cheers!
If you have been in your job for 2 years, your savings is "genuine savings" (i.e. you saved it yourself) and the property you are buying is in a major area then you may be able to borrow 85% with only $699 in LMI. This is a special deal offered by one of the lenders who specifically targets stable customers. If you do this type of loan you can keep more of your funds available to use for future investments.
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