- Hi,
I would like some advice on how to structure my loans. I still live at my family home and have one investment property currently tenanted and worth about $425k, I owe $270k on the property.
This property was newly constructed and hence I have two loans, let’s call these, land loan A and construction loan A with the one lender.
I also purchased a block last year purchased for $160K which I signed up with the same lender (no cross collaterisation as i didn't really know much about it so I put a 20% deposit down out of my own funds to avoid LMI) and now I have land loan B.
I have signed an agreement to build on the land next year, this will be another investment property and i am still in two minds about whether I should choose another lender for this new construction loan B and how I should structure my loans so I can get the best benefit from them.
My mortgage broker has given me the option of either a) cross collaterising both properties to avoid paying a deposit or LMI b)Use the equity that I have but pay the LMI, which would be over $7k c) Pay 20% deposit down (which if I had to, I could do with my own funds) to avoid LMI.
Could anyone shed some light on what course of action I should take?
Thanks
You could use some of the equity you have in your investment property to pay the deposit on the new property. You have an LVR of less than 65%- you owe $270k and it is worth $425k. Is there any reason why your broker hasn't suggested this?
Cheers,
LukeOr
Set up a LOC on the PPOR and use the LOC to pay for the initial deposit/costs so that you only need to borrow 80% under the main loan. This will avoid cross collateralising the loans and also avoid LMI. Why didn't he suggest this? he could have cost you $7k.!
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
Wow what an incredibly complicated structure your Broker has set up for you and as the boys have mentioned could end up costing you a pretty penny.
Before you rush might be an idea to take stock of the situation switch mortgage brokers and get the structure right before you proceed any further.
Always try and get the individual loan standing on its own two feet secured solely against the individual property.
Without further hard data it is difficult to comment fully but sounds to me like a wee bit of a mess.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Wow what an incredibly complicated structure your Broker has set up for you and as the boys have mentioned could end up costing you a pretty penny.Before you rush might be an idea to take stock of the situation switch mortgage brokers and get the structure right before you proceed any further.
Always try and get the individual loan standing on its own two feet secured solely against the individual property.
Without further hard data it is difficult to comment fully but sounds to me like a wee bit of a mess.
This is good advice. I just got out of a messy loan structure and it cost me $6,000 to refinance to a new lender.
It was worth doing because my interest rate dropped from over 9% to 6.39% but those refinance costs were a bit. It would have been preferable not to get into the mess in the first place.
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