All Topics / Finance / Best loan structure for me?

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  • Profile photo of AJMAAJMA
    Participant
    @ajma
    Join Date: 2012
    Post Count: 4

    I recently bought my first property – OFT property which I hope will be settling within the next 2 months.

    I am tossing up between the following;

    80% LVR (no LMI)

    or

    anywhere between 83% – 89% (+LMI)

    The property will be my PPOR for now but in future (depending on situation) could turn into an IP (how far in the future, I don’t know).

    Unfortunately it’s not the best investment I could have made (I only started researching investment property after I bought it – clever I know!) and I think it will hardly see any capital growth for the next few years (not sure if this should be taken into consideration with deposit amount).

    So here are some figures;

    $345,000 (purchase price) + $20,000 (additional costs) = $360,000

    I have approximately $117,000 in savings so I have enough to put down a 20% deposit and still have cash in my offset account.

    My loan (Homeside HomePlus) will be variable rate (IO) and will have a 100% offset account, so any money I don’t use on the deposit will go straight into my offset account (with no temptations to spend it – other than on property!)

    So questions is, should I put a minimum amount of deposit and incur LMI so that I can have a lump sum of cash sitting in my offset account so that it’s readily available should I want to go off and purchase an IP? Or put down 20% deposit and not incur LMI. It could be anywhere between 8 months to 18 months before I purchase a second property!

    I want to be in a favourable position for a future purchase and want to know whether LVR has a impact on serviceability.

    I know some people love LMI and others say don’t incur it if you don’t need to!

    I also know that the final valuation of the property will play a big part in what LVR I go with.

    Let’s assume (pray for me) that the property valuation will come in at the purchase price.

    Thanks for your time!!!

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi there

    Weren't the responses from SS enough :-)

    Personally, I have a preference towards using a smaller deposit, copping some LMI and retaining a large chunk of your savings. If this is going to be an investment later on – this debt will become deductible. I wrote this article for API mag recently on this exact topic.

    If you do decide to use a smaller deposit, you don't want to go above 90% LVR including LMI with Homeside – as soon as it creeps above 90% the rate goes up and the credit scoring becomes a lot harsher.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of AJMAAJMA
    Participant
    @ajma
    Join Date: 2012
    Post Count: 4
    Jamie M wrote:
    Hi there

    Weren't the responses from SS enough :-)

    Hehe, the more feedback I get the better. I knew everyone on SS will probably be here too but thought I'd try my luck on both :-P

    I appreciate you taking the time to respond.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    As Jamie mentioned sounds like you have had a enough responses already over the 2 forums so rather than add to the post I will leave it for you and your Broker to work thru the options.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of AJMAAJMA
    Participant
    @ajma
    Join Date: 2012
    Post Count: 4
    Qlds007 wrote:
    As Jamie mentioned sounds like you have had a enough responses already over the 2 forums so rather than add to the post I will leave it for you and your Broker to work thru the options.

    Yours in Finance

    Is it not common practice posting the same questions on different forums? It's my first time using these forums.

    I haven't had many responses and just wanted to hear what other people's opinions are, or what they would do in my situation. The more feedback the better but if this question isn't suited for a forum, I'm happy to delete it.

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    I see many questions posted on SS and this forum. Is that acceptable or should you stick to the one forum? I suppose it's like making friends with a rival.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    No it's all good.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of ModeratorModerator
    Moderator
    @moderator
    Join Date: 2010
    Post Count: 39
    AJMA wrote:

    Is it not common practice posting the same questions on different forums? It's my first time using these forums.

    I haven't had many responses and just wanted to hear what other people's opinions are, or what they would do in my situation. The more feedback the better but if this question isn't suited for a forum, I'm happy to delete it.

    AJMA, let me firstly say welcome to the world of forums, and more specifically to propertyinvesting.com!  It's great that you have taken the time to join our online community.

    The propertyinvesting.com forum is all about learning and support for those taking on the journey of property investing. Asking about loan structures is totally suited to the forum. We're glad to have you on board and hope you enjoy your time with us.

    Sincerely,

    – Moderator

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    No certainly have no problems with at all.

    Just often find however much advice you offer someone often they still go out and do what they want so prefer to keep the advice general on a forum as you don't know specific circumstances.

    When you mentioned your loan will be with Homeside it drew me to the conclusion that you had to have a Broker on board as they don't take direct business from the general public.

    No point in posting a response if he or she advises you differently.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of AJMAAJMA
    Participant
    @ajma
    Join Date: 2012
    Post Count: 4

    That's a good point Richard and you are correct about having a broker on board (I nearly left that out but then thought I'd risk hearing any comments that might say keep clear of Homeside, lol!

    The reason I wanted to ask the forum is because I didn't want the pressure of anyone trying to sign me up for their services at this point in time. I've been to lots of seminars and info nights, and the minute they know you are a first time buyer they try to get you to sign up to everything.

    My broker gave me some good options but of course ultimately the decision is down to me and my future goals and me being extremely indecisive doesn't help the situations and thought maybe I should hear some comments that could make me even more confused with what to do, haha!

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Being indecisive won't get your far. So many people get caught up with over analysing everything that they never actually do anything.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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