All Topics / Help Needed! / Throwing away LMI and Stamp Duty. How much is too much?

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of SazSaz
    Member
    @saz
    Join Date: 2013
    Post Count: 8

    Hi All

    We have a contract on a duplex on the GC for our first IP. Price is $273,000.

    Our broker initially gave us an indication that we could borrow A LOT more ($800,000) so we thought we would purchase a couple of cheaper properties in different areas. Our valuation on PPOR came in lower than expected. We have come short with borrowing from one of the majors and now have one option left to buy this property. This last option would mean that we will be paying $8483 in LMI on PPI and $3281 on IP. So, add on the stamp duty of $8593, legals etc. and that is a lot of money 'down the drain'.

    Do you think it is worth it??? Have until Thursday for finance.

    Profile photo of HomeLoanExpertsHomeLoanExperts
    Participant
    @homeloanexperts
    Join Date: 2007
    Post Count: 43

    Yeah that is a lot of LMI to make the investment work. Did he try getting a valuation on your home from another lender?

    Profile photo of SazSaz
    Member
    @saz
    Join Date: 2013
    Post Count: 8

    HI HLE. Yes she did get 2 valuations. I was using a valuation I had a year ago and it came in $25k lower now. Maybe they are being more cautious? Nevertheless it is what it is.

    The rent will still cover the repayments and insurance for property. We will have to outlay the rates.

    Profile photo of Rick staRick sta
    Participant
    @rick-sta
    Join Date: 2011
    Post Count: 120

    My first thought was- can you pull the old “the valuation (on the IP) came in low, so now I can only afford to pay $x” thus reducing the LVR and LMI payable, but you don’t really have time on your side for this…

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

    Hi Saz

    It's difficult to comment on whether it's worth it without knowing the finer details and being able to work out if there's a suitable alternative.

    Some valuers are being quite conservative at the moment. Particularly in parts of Syd that are experiencing a bit of a boom at the moment (not sure if that's where you're located). They also tend to be more conservative for non-purchase valuations where they're going off the customers estimate.

    All in all, it's a fair bit of LMI to cop – but do you think the investment is going to perform well in the longer term? If so, you probably won't even remember how much LMI you paid 10 years from now. It's a deductible fee too.

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

    Even without the finer details there is always options and your Broker should have given you a couple of these.

    With the right sort of property 100% standalone fine is possible but not if you only have to Thursday to make up your mind.

    Sounds like poor advice in the first place.

    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 SazSaz
    Member
    @saz
    Join Date: 2013
    Post Count: 8

    Thanks everyone. I think this investment is going to be a bread and butter one. Slowish annual growth but very easy to rent being a block from the beach and very low maintenance. I just have to get over that feeling that I am 'throwing away" the money and take the plunge. It would have been valued about $35k higher a couple of years ago than my total loan will end up being. I do believe it can get there again. WIll just depend on how the GC property market performs.

Viewing 7 posts - 1 through 7 (of 7 total)

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