Short term LMI.

Discussion in 'Loans & Mortgage Brokers' started by Groldol, 6th Oct, 2017.

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  1. Groldol

    Groldol New Member

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    6th Sep, 2016
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    Location:
    Harrington, NSW
    Looking for some options for this situation.

    My partner and I are in the middle of selling and buying investment property.

    We have 2 investment properties and our PPOR and will be settling on 1 of the investment properties today and listing the other in the next week or so.

    We have also found another property which we are wanting to purchase as in an IP.

    After what seems like an eternity the bank we are dealing with, who do not currently hold any of our mortgages, has informed us we will require substantial LMI. Further they have reduced the amount they will finance due to a low valuation on the remaining IP. Funds which are needed for repairs and maintenance.

    The initial appraisal from the real estate agent on the remaining IP was higher than anticipated and the property was described as being desirable and in short supply so should sell reasonably quickly, particularly given the listing price will be higher than we anticipated.

    As I see it the LMI will only be required for 3 - 6 months.

    Options at this point are -

    1. Pay the LMI and chalk it up to bad timing.
    2. Return to the bank holding the current mortgages and pay a lesser amount as a "top up" of existing LMI although this will frustrate the vendor of the new IP who has already been very patient.
    3. Source a short term loan (110K) to eliminate the LMI

    Any advice would be gratefully received.
     
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  2. Hodor

    Hodor Well-Known Member

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    Short term loan would be unsecured and likely high interest. Over 6 months the interest would be quite a bit I would have thought
     
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  3. Groldol

    Groldol New Member

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    6th Sep, 2016
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    Location:
    Harrington, NSW
    Thanks for the reply and your right the interest rate would be high however the mortgage insurance would equate to around 25% pa. i doubt a short term rate would be that high and is likely to be of less duration than 6 months.
     
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  4. Terry_w

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

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    Its hard to understand - can you please add some figures as an example?
     
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  5. Martin73

    Martin73 Well-Known Member

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    Have you spoken with a broker? Might be a good idea to get some better advice than dealing with the bank direct.