Lmi waiver for legal folk

Discussion in 'Loans & Mortgage Brokers' started by DoingOK, 3rd Jul, 2021.

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  1. DoingOK

    DoingOK Well-Known Member

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    Asking for my son.
    He has just become a special counsel ( proud dad moment) and is looking for a loan with lmi waiver for lawyers. He has substantial deposit but not 20%. He ideally wants IO with offset so if down the track he buys again this can go to IP status and make use of the full deductibility of the loan. He is single and on track to be partner within a year or two at most.
    I assume he needs big 4 bank to do this but welcome any and all feedback. Ps. He want to be independent and not borrow from us, otherwise he could have bought before now.
     
    DoingOK, 3rd Jul, 2021
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Half a dozen lenders

    IO may be a tough gig, though not impossible with the right reasoning for credit.

    IO does rule out some lenders that wont even do IO on Investments

    ta
    rolf
     
    Rolf Latham, 3rd Jul, 2021
    #2
  3. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Assuming his going to borrow 90% then yes a few of the majors will take him on.

    But going IO might not be an option, generally needs a really good reason for IO in PPOR ( assuming it is PPOR).
     
    Last edited: 3rd Jul, 2021
    Tony Xia, 3rd Jul, 2021
    #3
  4. DoingOK

    DoingOK Well-Known Member

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    It is poor but the idea is that if he upgrades in a few years he can rent this out with the tax benefit of the full loan. He already has lots of shares and 15% deposit pending costs and house price. He had tried for a house but the building inspector said it might need underpinning and said to walk away. Putty as was a nice house but 50k to underpin was not something he wanted to do
     
    DoingOK, 3rd Jul, 2021
    #4
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    The first few years of a loan have a very small portion of repayments going towards the principal.

    Utilising the offset for 'spare/excess' cash to reduce interest may be a bit pointless if he wishes to maintain the maximum principal balance.

    Refinancing to IO once he no longer requires it (& taking out all the money in offset prior to the new loan being finalised).
     
    Scott No Mates, 3rd Jul, 2021
    #5
  6. zlatan9

    zlatan9 Well-Known Member

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    Is this correct if interest rates are low (eg 2.0-3.0%)? Repayment calculators seem to show that it's roughly 50%/50% principal repayment / interest repayment even in the first few years.
     
    zlatan9, 21st Nov, 2021
    #6
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Take $100k over 25 years @ 3.0%

    Interest only - $250/month
    P&I - $474/month
    Principal repayment -$224 (47.26%)

    So at low interest rates there isn't much of a difference but once interest rates increase it becomes quite a different story.

    Take $100k over 25 years @ 5.0%

    Interest only - $417/month
    P&I - $585/month
    Principal repayment - $168 (28.72%)


    Take $100k over 25 years @ 10.0%

    Interest only - $833/month
    P&I - $909/month
    Principal repayment - $76 (8.36%)

    The principal repayments are much higher at lower interest rates

    Loan Repayment Calculator - Loan Market
     
    Scott No Mates, 21st Nov, 2021
    #7