Hi to all I’m interested to get some opinions on a situation I find myself in. I’m refinancing loans for two properties I have with a new lender. Valuations have been done on both properties. Property 1 LVR 76% Property 2 LVR 83% I have three options. Option 1. Pay approx $3500 in LMI for Property 2 (have never paid LMI before and generally think you shouldn’t unless you really need to) Option 2. Reduce the loan of property 2 by $15k to make the LVR <80% (No problem finding the $15k. I’m more concerned with the tax implications) Option 3. Cross collateralise the two properties (I don’t have any of my properties x-colled right now and I’m generally against it) Which option would you choose? Thanks AMB
Either Option 1 or Option 2. For Option 2 $15k should be done as a separate split if one property is an Investment, the other is an owner occupier property. Obviously with this option you save $3,500. I wouldn't go for Option 3 - as it ties you in and may cause issues e.g. if values go backwards and you wish to sell one of the properties. Which one are you leaning toward?
Option 4 Borrow against Property 1, under a new split and pay down the loan for property 2. Will that be possible with keeping both loans 80%LVR?
A new option...get upfront valuations from other banks and hope for both properties come back high enough to be 80%
Oops - I misread your Option 2. I'd go with what Terry is saying. Get equity cash out against Property 1, and use that to reduce LVR for Property 2
Thanks Terry. This is an option I never even considered. It would keep both loans under 80% so it should work. I'll see if there are any issues with that from my lender. Appreciate the suggestion!
Thanks for offering your opinion. Without Terry's advice, I would probably have gone with Option 2 but now I think Option 4 is a great alternative.
Thanks Tony. This was actually the fourth valuation done on these two properties. It was hard enough to get one of them under 80%, let alone 2. Amazing how vastly different valuations can come back from various banks.