Best lender for up to 90% LVR

G'day all,

Long time lurker, first time poster.

We're planning to purchase a PPOR in Broome, WA in the near future as our first house. Our budget is around $550k for a four bedroom house. We have about $380k in shares and will sell down a portion for a deposit. I have run some figures and I think we will go with a higher LVR and cop the LMI with such low interest rates, instead of selling down more income producing assets.

We have been pre approved a loan with Loans.com.au for 2.79% or 2.89% with an offset account. This is for 88% LVR and LMI.

Does anyone know of any other lenders that can compete with there rates for 88% LVR?

Cheers,
Dingo.

 

You can get those same rates with more "robust" lenders like Westpac, etc.

The key here is that you are paying LMI so its crucial to use a lender that you can reuse later.

The lender needs to have a good servicing calculator, good cash out policy, good LMI policy, own DUA, etc.

You want to be able to reuse the LMI credits and not have to refinance to another lender at a later stage( as you would lose the LMI credits).

 

Thanks for your reply. As I'm new to property there is a lot in this I don't understand and would love some guidance.

- What do you mean by reuse? I am only planning on purchasing a PPOR and no IP.

- What is DUA?

- What is cash out policy? Is that if my PPOR goes up in price I can cash in the difference?

Thanks so much for your time.

Dingo

 

If you pay LMI then you can draw upon the equity at a later stage and reuse the LMI paid previously. So lets say you paid $5,000 in LMI at the time of purchase and after 12 months you want to draw upon the equity available in the property. The LMI for the extra amount would be say $5,500 but since you have already paid $5,000 then you just pay the difference in LMI.

DUA is delegated underwriting authority - some lenders have the ability to approve loans themselves or in house and others don't have a DUA which means that they need to approve it but then they refer to the file for the underwriter to approve. So although the lender may be comfortable with the proposal - the underwriter may not.

Cash out policy is the same as equity release. It doesn't matter if its a PPOR or IP - you want the ability to extract on the equity of the property at a later stage in the cycle.

 

Thanks so much. I have a lot to learn. I've had a look at Westpac and I'm struggling to find where they lend over 80% LVR. I will continue to do research.

 

Thanks for your reply, Rolf.

We are considering Debt Recycling but I am planning to move from PAYG employment to full time small business and I'm worried that my income might flucate too much and id like to keep the risk low and keep it simple.

We would potentially start this strategy down the track one we get our heads about a mortgage as we've never held debt before. We are very comfortable with the share market and I can see how this strategy could suit us.

 

Try St George/Bank of Melbourne. They are currently only charging $1 for LMI based on max LVR of 85%. Rates will be lower than loans.com too and you should be able to get sub 2.7% variable.

Effectively by contributing an extra ~$15k you will save around $6-7k in LMI which is a pretty good return imo.

 

OK, I've just had a look at this. Thanks for the heads up.

It does say "Note: the First Home Buyer LMI Offer is not an LMI waiver and your clients will be charged $1.00 LMI which will be reflected in their Loan Offer Documents" .

Does this mean you still pay LMI? I don't get it?

Thanks for your help.

Dingo

 

Broome is an incredible place - best of luck with your move.

You’ve had two of the best brokers in the country respond to your post - I’d choose one and get your loan set up properly rather than going the DIY route with rate as your primary focus.

Cheers

Jamie

 

Thanks Jamie,

I wasn't aware they were after my business. Anyhoo, I shall contact them.

Dingo

 

This doesn't mean zip, sorry to burst your bubble but the pre-approval is not credit assessed so I wouldn't rely on it

 

If you borrow between 80-85% they will charge you only $1 for LMI. Anything above 85% they will charge the normal premium.