Refinancing scenario

Discussion in 'Loans & Mortgage Brokers' started by DOSHman, 19th Feb, 2021.

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  1. DOSHman

    DOSHman Well-Known Member

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    Hi All,

    I would appreciate any input on the following scenario as a newbie looking to expand a portfolio

    I am about to begin the process of refinancing my first investment property to access equity to purchase a second. I haven't been through this process before so it is all new to me. When refinancing my IP it will raise the LVR to 85% meaning I will incur LMI on the loan (somewhere around the 6K mark). My beliefs are that this should not be a deterrent as this is a tax deductable payment and it will also allow me to enter a second market sooner with hopes of future capital growth. Is this the right mindset?

    I will be looking to invest interstate for the first time, does anybody have any advise on doing this. I will be doing my own extensive research on this, but for a starting point how do you narrow down a particular market to invest in? everything feels so broad and I often find myself going in circles due to indecision.
     
    DOSHman, 19th Feb, 2021
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    why 85 and not 88 ?

    ta
    rolf
     
    Rolf Latham, 19th Feb, 2021
    #2
  3. DOSHman

    DOSHman Well-Known Member

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    would you suggest taking out the highest possible percentage LVR, why is this?
     
    DOSHman, 20th Feb, 2021
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    No specific recommendation, we know nothing about your resources, goals, risk profile risk management etc

    Typically, by the time you pay the LMI premium to 85 the extra cost to get to 88 is worthwhile if you have little buffer, or the extra 3 % geared up into a new property, gets you into a better IP

    ta
    rolf
     
    Rolf Latham, 20th Feb, 2021
    #4
  5. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    I believe LMI is tax deductible over 5 year period.
     
    Tony Xia, 20th Feb, 2021
    #5
  6. Richard Taylor

    Richard Taylor Well-Known Member

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    Or the term of the loan whichever is shorter. Proportionalised for the first year dependant on settlement date.
     
    Richard Taylor, 20th Feb, 2021
    #6
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    LMI could be deductible, but would be it deductible for a cash out?
     
    Terry_w, 20th Feb, 2021
    #7
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