Mortgage more than 80•/•

Hi guys

Please let me know what are the implications of taking mortgage more than 80 °/•

 

You'll probably have to pay lenders mortgage insurance. Depending on the lender and the product, the loan approval process might require some extra documents and the interest rates may be higher. It may also mean waiting longer to release equity in the future.

If you've got the cash for a 20% deposit and costs, and you don't need to preserve some of that cash for the future, then an 80% loan is far preferable. However some people opt for a 90% loan even when they could fund 80% because it leaves them with more cash in their pocket for the next deal or other things in life.

 

LMI is the big one..

If it helps secure the property without any financial hardship, I'll embrace it ..

Sweet spot is around 87%!

Cheers,

 

Hi @Sigemup, I don't know where you live however if you are able to get yourself to a local meet up, I highly recommend that for you. It will help you with all your questions.
Gockie.

 

LMI is one.

Are you buying a home or an investment?
If investment, Are you able to instead buy 2 x properties by paying LMI (means a bigger exposure to the market - and compounding growth)
If home, if you held funds back would you be able to invest the remaining funds and make it go further for you? (Be mindful, if you hold money back, you need to ensure its set up correctly to enable you to invest tax effectively)

 

Thank you property twins.

In your previous message on another thread you mentioned some lender related issue on LMI ..

Could you please tell me what that is ?

Thank you

 

Which post? Please can you post the link here

 

This is the link:

How to go about getting a mortgage

and this is the text from the post in that link I am asking about:

"
.....

Also, if you are paying LMI (borrowing more than 80%), it becomes even more important - as you could get stuck with the wrong lender.

Definitely get the advice on the front end"

 

When you pay LMI it is harder to move from one lender to another, unless:
>> Value increases
OR
>> You pay LMI all over again

Its important (specially for home buyers who are looking to build a property portfolio), to be selective about which lender they go to - as it could potentially fast track their property journey, and enable them to pay to pay off their home faster.

 

This is referring to the fact that LMI is not transferable from one lender to another. If you take a 90% loan with lender A, then later want to refinance to lender B because they have a cheaper rate, if the LVR is still above 80%, the cost of paying LMI again will likely be greater than the savings from the interest rates.

 

Seen it happen Pete

Had someone with the right lender to begin with - they had paid c. $15k LMI, they then refinanced and paid another $10k with a lender which unfortunately won't help them with expanding their portfolio that easily.

With a changing Sydney environment, I think they'd be staying there for a while

 

Probably convinced by the new lender that a cheaper rate is more important than longer term planning. Never mind the fees.

 

Yep! and a House and Land Package in an Ipswich estate to go with it

 

1. LMI
2. Possibly a higher rate (some lenders price loans better when it's sub 80% LVR)

Cheers

Jamie