Lenders mortgage insurance (LMI) may be an added expense, but it offers buyers the opportunity to dive into the property market earlier, without saving up an entire 20 percent of the property’s purchase price as a deposit. What is it? LMI protects the bank or lender, should a home loan go into default, guaranteeing that the lender will get its money back if the property needs to be sold and there is a shortfall in repaying the loan. While a 20% deposit generally provides a good buffer against any drops…

Regardless of whether you are a first home buyer or a seasoned property investor – Obtaining a pre-approval should always be part of your first steps when embarking on a property purchase journey. What is a “Pre-Approval” A pre-approval: (Also known as a “conditional approval,” “indicative approval,” or “approval in principle”) Refers to an initial assessment from a lender whereby they agree, in principle only, to lend a certain amount of money to an applicant prior to the actual purchase of a property. There are technically TWO kinds of pre-approvals:…

The difference between “Restructuring” and “Refinancing” In a constantly changing environment, it is important to ensure that your bank and mortgage are keeping up with both interest rate movements and your own personal circumstances. If not, it may be time for you to change things up as well. When evaluating your circumstances, there are typically TWO options available: Restructuring – (Internally) Refinancing – (Externally) Restructuring (Internally) with your Existing Lender Reviewing your finances does not always have to result in refinancing to a new lender. Often, you can restructure your finances with your…

Purchasing an investment property that already has a tenant means you collect rent from day one, with no vacant period and no lease fees to find a new tenant. The lease just carries on as it did before you purchased the property. Sound good? Of course it does. There are some possible problems to be aware of though. It’s very important to check whether the lease on your prospective investment is current or the tenants are on an expired lease. If the tenants are off-lease, they can give a short…

Within the last 18 months banks have started looking much more closely at applicant’s credit files. This reduces the documentation needed for an application and makes the process faster. However, if there are any misdemeanors on your credit file, this has a much greater effect than before and may mean the bank doesn’t approve the application. Important information to note: –         Anytime you apply for any type of credit – car/home/personal loan (as well as a phone plan or utilities contract), there is an inquiry placed on your credit file. This…

Specifically, it applies in the event a borrower defaults on their loan, and the property is sold for less than the outstanding loan balance, leaving a shortfall. The insurer pays the bank the loss, then may peruse the borrower for the loss. –         LMI is generally required when the loan you need exceeds 80% of the property’s value. However certain banks only apply this over 85%, and even 90%/95% for some professionals (Doctors/Law professionals/Accountants etc.). –         LMI is a large fee to get into a property earlier than if you saved additionally….