FHB Finance

Discussion in 'Property Finance' started by zuzu111, 17th Oct, 2018.

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  1. zuzu111

    zuzu111 Member

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    Hi all,

    I'm a little bit confused with new changes to lending etc; mostly around capitalising LVR etc.

    Mrs and I are looking at purchasing a property within the next 6 months. Currently have about 62K saved and will have around 75K saved by March 19. No debts. Income 94K P.A for me & 55K for her. Currently paying $550 pw rent and saving around $525 per week.

    We are looking at properties between $575-610k and are hoping to put down only a 10% deposit. Which would mean a loan of $520-$550 - is this realistic on our wage? Also, we need to pay LMI, if we have a 89-90% LVR does this then mean our loan would be 92% LVR; now meaning we need to save more in order to reduce that back to 90%?

    Thanks
     
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  2. Property Twins

    Property Twins Mortgage Brokers - Australia Wide Business Plus Member

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    Hi zuzu
    Welcome to PC.
    LMI can be capitalised on top of the loan, borrowing capacity permitting.
    For a 610k purchase, you require 61k 10% deposit.
    Being a FHB, depending on where you are buying, you may also be eligible for stamp duty waiver.
     
  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    At a very high level the lender looks at 2 things; servicing/borrowing capacity and deposit position.

    A definite answer can't be given on the servicing as it depends on your living expenses, if you have no dependents or 6, etc however based on the numbers you have provided this should be ok.

    From a deposit perspective (and LVR), if this is your first purchase at $610,000 and you are eligible for the stamp duty exemption then at a 95% LVR (including LMI capitalised/added onto the loan) you will require a minimum deposit of $54,000 including legals and bank fees. 95% LVR means the base LVR is around 92% and the LMI is approximately 3%.

    LMI skews at 88% and 90% LVR so if you can keep the LVR to say 90% plus LMI capitalised then the minimum deposit you require is $64,000.

    The difference in LMI between 90% plus LMI and 95% including LMI is approximately $7,000.

    So in other words you are paying or borrowing an extra $7,000 in LMI in order to save $10,000 in deposit. It seems from a deposit perspective you can do 90% but its also dependent on what you want to do in the future in terms of investing and if you need the funds for that.
     
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  4. zuzu111

    zuzu111 Member

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    Great, thank you. For the record no children and no debt.
     
  5. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Then you are looking good mate and also its a dual income app which scores well with lenders.

    Just ensure you pick the right lender since you are paying LMI as you want to be able to reuse the LMI credits in the future. So a lender will a good cash out policy and DUA is key.
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Are you looking to buy an owner occupied home or an investment? If an OO, you can add LMI onto your loan even with the 10% - no need to keep it under 90% incl LMI, although this does make a significant difference to the LMI cost.
     
  7. jazzsidana

    jazzsidana Mortgage Brokers - Investment Savvy Business Member

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    Best to contact a broker and go through the process to find out what's the max amount you can borrow and also short/long term goals..

    Also, ask him/her to help you find the sweet spot where LMI is not ridiculously high for the purchase price.

    And awesome work on savings!!..

    Good luck.

    Cheers,
     
    Last edited: 18th Oct, 2018
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    All the important stuff on lmi has been answered. On the assumption that this will be for a home, hBe a look to see if an active debt recycle strategy is something for you , which may help you may the home office much more quickly, saving 10 s of thousands.

    Most lenders products can't accommodate the strategy. Some are ideally suited and some can be worked around.

    If you are paying a bunch of lmi, make sure that you can do such a strategy if you wanted to.

    Ta. Rolf
     
  9. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    for a property worth 610k,
    [email protected] = 8.5K (i.e. deposit of 74k)
    [email protected] = 12.3k i.e. (deposit of 61k)
    [email protected] = 20.5K (i.e. deposit of 49k)

    so for 25K more in deposit between 92 &88 lvr loan, you can save 12k in LMI.

    Lenders Mortgage Insurance Calculator
     
  10. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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  11. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Or 'her'?
     
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  12. jazzsidana

    jazzsidana Mortgage Brokers - Investment Savvy Business Member

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    Thanks for spotting bud!.. fixed
     
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  13. zuzu111

    zuzu111 Member

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    Thanks all for the replies. Yes I am looking at owner occupier - when you refer to 92% LVR loan plus LMI, I thought there weren't many lenders lending above the 90% LVR?
     
  14. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Quite a few will do it for owner occupier properties, especially first home buyers. I often find that the limiting factor for FHBs is the deposit, not the affordability.
     
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  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Amost all lenders will go to 95 for PI PPOR loans, some rarely to 98/99, but is it wise ?

    IO PPOR some wont even do at 80 unless by exception.

    ta

    rolf
     
  16. zuzu111

    zuzu111 Member

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    So some lenders are lending 95% LVR + LMI? Or 95% LVR inc LMI? Sorry, I am just confused
     
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  17. Lindsay_W

    Lindsay_W Well-Known Member

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    Yes it's true that some lenders will lend 95% PLUS LMI, total LVR of 98/99%
     
  18. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    You can get 95% + LMI, but be prepared to pay over 1% extra for it.
     
  19. Lindsay_W

    Lindsay_W Well-Known Member

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    We recently did a pre-approval for 98% LVR Owner Occupied P&I loan with an interest rate of 3.84% Variable (3.98% Comparison Rate) so you don't need to pay a high interest rate for that LVR, there are options out there.
     
  20. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Often these lenders will have higher premiums than the major banks LMI (if they did it). I did some LMI comparisons recently for about a $500k loan and it varied by about $5k per lender.

    But this does not necessarily matter if you hold the loan long term on a low rate.