Best Low and No-Doc Products
- Thread starter fatboy4
- Start date
Hi Tony
What sort of LVR ?
ta
rolf
What sort of LVR ?
ta
rolf
low and no docs
Hi Rolf,
that was fast. 80/20 would suffice; even 70/30. I guess the less cash we have to put in the better.
I meant to also ask if there are lenders who do no and low doc loans as second mortgages (we have two IP's with low LVR's 50/50-ish- not cross-collateralised. Could we use the equity for a low or no doc loan? (without punitive fees etc)
Thanks
Tony
Hi Rolf,
that was fast. 80/20 would suffice; even 70/30. I guess the less cash we have to put in the better.
I meant to also ask if there are lenders who do no and low doc loans as second mortgages (we have two IP's with low LVR's 50/50-ish- not cross-collateralised. Could we use the equity for a low or no doc loan? (without punitive fees etc)
Thanks
Tony
Hiya Tony
Lo doc funders are in the business to make money, so if you can find one that will allow you to get away with less than 1.5 % in entry/exit costs you are doing well.
How much money and waht postcode pls ?
ta
rolf
Lo doc funders are in the business to make money, so if you can find one that will allow you to get away with less than 1.5 % in entry/exit costs you are doing well.
How much money and waht postcode pls ?
ta
rolf
Hi Tony
When looking at short term finance, the most flexible way to organise finance for your planned purposes is to make sure that your lender allows for 'substitution of security', that way you will only have mortgage discharge / mortgage registration, valuation and document fees between properties.
The loan, which is secured by mortgage over property, remains open so you won't have early repayment fees involved with each transaction.
Establishment and Deferred Establishment Fees relate to the setting up of the loan and the closure of the loan. The loan is separate to the registration of mortgage, which has various processing and statutory charges and will cost roughly the same no matter the source of the loan funds.
To give you a working example of this, let's say you take out a loan of $300,000 to 80%LVR, secured over one or more properties to the value of $375,000.
For this exercise, I shall split the finance over a property you intend to keep and one which you intend to trade.
So let's say your 'fixed' security is a property valued at $200,000 which you finance / refinance to $160,000, and the 'trade' property which you purchase for $175,000 and finance to $140,000.
The mortgage for $160,000 will receive the proceeds of the sale which will be available for redraw for the next project, and the mortgage for $140,000 will be shifted on sale to the new purchase, or simply remain inactive until the next property is purchased.
If your securities are in Queensland, this would involve
Property purchase and finance costs:
Legal & Conveyancing, say $750
Adjustment of Rates at Settlement $750
Valuation of Securities (both will need to be valued when setting up the loans) 2 x $275 = $550
Lender's Legal fees (documents and settlement) 2 x $500 = $1,000
Sundries and Disbursements (allow) $450
Queensland Stamp Duties on purchase of investment property of $175,000 = $4,788
Queensland Mortgage Stamp Duty $160,000 = $640
Queensland Mortgage Stamp Duty $140,000 = $560
2 x Mortgage Registration @ $109 each = $218
However, when you sell the $175,000 property, you will not 'discharge' the mortgages, simply pay down the balances to $1, thus leaving the loans open and active.
The $160,000 loan simply sits there.
The $140,000 loan will go into abeyance when the security property is settled, and until a new security property is organised. The $140,000 loan can then be reactivated once it has a new mortgage over a new security property.
This manoevre would cost:
Discharge of mortgage $109
Registration of new mortgage $109
New Valuation eg $275
New Lender's legal and documents fees $500
and the usual sale and purchase costs eg conveyancing, rates adjustment etc
You would have to get legal advice whether the $140,000 would incur another QLD Mortgage Stamp Duty charge ($560, as above) when the new mortgage registration occurs.
The change over is not a new loan. It is the same loan with 'substitution of security'. Not free, but certainly not expensive.
Should you choose a lender which accommodates this process, this will widen your choice of lender instead of concentrating on establishment and early payout penalties, which with many loans are now becoming a fact of life and can add significantly to the cost of investing and of doing business.
Hope this helps
Regards
Kristine
When looking at short term finance, the most flexible way to organise finance for your planned purposes is to make sure that your lender allows for 'substitution of security', that way you will only have mortgage discharge / mortgage registration, valuation and document fees between properties.
The loan, which is secured by mortgage over property, remains open so you won't have early repayment fees involved with each transaction.
Establishment and Deferred Establishment Fees relate to the setting up of the loan and the closure of the loan. The loan is separate to the registration of mortgage, which has various processing and statutory charges and will cost roughly the same no matter the source of the loan funds.
To give you a working example of this, let's say you take out a loan of $300,000 to 80%LVR, secured over one or more properties to the value of $375,000.
For this exercise, I shall split the finance over a property you intend to keep and one which you intend to trade.
So let's say your 'fixed' security is a property valued at $200,000 which you finance / refinance to $160,000, and the 'trade' property which you purchase for $175,000 and finance to $140,000.
The mortgage for $160,000 will receive the proceeds of the sale which will be available for redraw for the next project, and the mortgage for $140,000 will be shifted on sale to the new purchase, or simply remain inactive until the next property is purchased.
If your securities are in Queensland, this would involve
Property purchase and finance costs:
Legal & Conveyancing, say $750
Adjustment of Rates at Settlement $750
Valuation of Securities (both will need to be valued when setting up the loans) 2 x $275 = $550
Lender's Legal fees (documents and settlement) 2 x $500 = $1,000
Sundries and Disbursements (allow) $450
Queensland Stamp Duties on purchase of investment property of $175,000 = $4,788
Queensland Mortgage Stamp Duty $160,000 = $640
Queensland Mortgage Stamp Duty $140,000 = $560
2 x Mortgage Registration @ $109 each = $218
However, when you sell the $175,000 property, you will not 'discharge' the mortgages, simply pay down the balances to $1, thus leaving the loans open and active.
The $160,000 loan simply sits there.
The $140,000 loan will go into abeyance when the security property is settled, and until a new security property is organised. The $140,000 loan can then be reactivated once it has a new mortgage over a new security property.
This manoevre would cost:
Discharge of mortgage $109
Registration of new mortgage $109
New Valuation eg $275
New Lender's legal and documents fees $500
and the usual sale and purchase costs eg conveyancing, rates adjustment etc
You would have to get legal advice whether the $140,000 would incur another QLD Mortgage Stamp Duty charge ($560, as above) when the new mortgage registration occurs.
The change over is not a new loan. It is the same loan with 'substitution of security'. Not free, but certainly not expensive.
Should you choose a lender which accommodates this process, this will widen your choice of lender instead of concentrating on establishment and early payout penalties, which with many loans are now becoming a fact of life and can add significantly to the cost of investing and of doing business.
Hope this helps
Regards
Kristine
Hiya
Comes down to fair exchange at the end of the day.
The funder will generally make stuff all money on a mortgage in the first 6 months, and especially lo doc funders dont want mortgages turned over to often.
If you can keep the LVR to sixty percent, by drawing 80 % out of your existing portfolio, a Homeside 60 % lo doc loan would do. No deferred establishment fees, standard rates and about 1000 in, and with no lmi is a pretty good deal if you qualify.
ta
rolf
Comes down to fair exchange at the end of the day.
The funder will generally make stuff all money on a mortgage in the first 6 months, and especially lo doc funders dont want mortgages turned over to often.
If you can keep the LVR to sixty percent, by drawing 80 % out of your existing portfolio, a Homeside 60 % lo doc loan would do. No deferred establishment fees, standard rates and about 1000 in, and with no lmi is a pretty good deal if you qualify.
ta
rolf
RAMS No Doc 70%?
cant remember the costs, but pretty easy to do
cant remember the costs, but pretty easy to do
Hiya Young
I think at $ 1000 or so in, and 2 % out he wont like that too much.
ta
rolf
I think at $ 1000 or so in, and 2 % out he wont like that too much.
ta
rolf
Thank you for the replies guys,
(specially Kristine's very detailed one.
) I had no idea about a lot of that; it's great to be able to pick the brains of some of the best and brightest property people out there...
60% is enough and would preserve a lot of our cash buffer- so that sounds pretty good to me Rolf. I hear what you're saying about lenders not making money out of short term loans- hence the in and out fees. Perhaps we should set up facility along the lines of Kristine's suggestion and keep it open.
Thanks again,
Tony
(specially Kristine's very detailed one.
) I had no idea about a lot of that; it's great to be able to pick the brains of some of the best and brightest property people out there...60% is enough and would preserve a lot of our cash buffer- so that sounds pretty good to me Rolf. I hear what you're saying about lenders not making money out of short term loans- hence the in and out fees. Perhaps we should set up facility along the lines of Kristine's suggestion and keep it open.
Thanks again,
Tony
fatboy4 said:
Tony,
We do 2nd mortgages, but fees & rates are high.
It's best if we do 1st & 2nd though, as we usually need
1st mortgagee conscent.
We have some private 1st mortgages who'll mortgage it up more than most
though.
No LMI. We usually underwrite it ourselves with adequate debt cover.
But the cost of a partner with equity is usually much more expensive.
Justin
