If you’ve ever thought about buying or investing in an apartment unit that’s stratum title, you may not know that many lenders restrict their lending.
Unfortunately, Stuart and his family had no idea this was going to be an issue when they cashed out equity in their home to buy an apartment closer to the city.
Luckily, with the help of one of our senior mortgage brokers who is an expert in unique property types, he was able to find a lender that would accept his security.
The story
With a newborn at home, Stuart was getting fed up with making his daily trek to the city for work and wanted to spend more time with his young family.
He wanted to move closer to the city not only for his job but also to embrace the lifestyle that he and his wife enjoyed.
Luckily, they had been living in their own home for the past couple of years and although they were still paying off their mortgage, their property had grown in value during that time and they had some equity to play with.
They were also coming to the end of the fixed period on their home loan so they were in a position to refinance, cash out for a deposit and start looking for a new place to live.
So Stuart went ahead and refinanced their mortgage at 80% of the property value and cashed out $150,000 or around 5% LVR (Loan to Value Ratio).
Combined with his own savings, Stuart had a considerable deposit to put down and, after a bit of searching, he and his wife fell in love with a spacious unit in a relatively new apartment block. It was perfect.
The problem was that when he went back to his lender and explained the property he wanted to purchase, they restricted his borrowing to 80% LVR and he could only afford to borrow at 85%.
Despite having a good deposit and a great income, most lenders will typically restrict lending to 80% LVR when it comes to stratum title.
Stuart simply couldn’t simply pass up the amazing apartment and decided to speak to a mortgage broker.
A clever solution
After assessing the couple’s situation, Mike was able to find one of the few lenders that would allow Stuart to borrow up to 85% LVR for the stratum title unit.
Although Lenders Mortgage Insurance (LMI) applied because he was borrowing over 80%, Stuart was able to qualify for a really competitive LMI premium and 1.3% discounted interest rate exclusive to Home Loan Experts.
That’s because this particular lender didn’t have QBE or Genworth as their LMI provider but instead had Arch Capital, a relatively new player on the market.
More often than not, they offer the cheapest LMI premium when it comes to 80-92% LVR home loans.
Unfortunately, when Stuart home loan settled, he found that he was overcharged on his LMI premium and made a complaint to Home Loan Experts.
After investigating, we quickly found that the LMI premium that the lender was advertising was totally incorrect.
Luckily, because of the strong relationship that we have with the lender, we were able to speak to their state manager and push for a refund of almost $2,000 paid directly to Stuart.
A happy ending
In the end, Stuart was able to move into apartment unit with his family and is currently earning another source of income by renting out his old home as an investment property.
Since the mortgage on his old home is above 80% LVR, refinancing was not cost-effective for Stuart at the time.
However, Mike will be in contact with Stuart in the future once he has paid down the loan or the property has increased in value.
This type of added service is unique to Home Loan Experts and why Mike regularly receives shining testimonials from his happy clients.
Speak with one of our expert mortgage brokers by calling 1300 889 743 or by filling in our free assessment form today!
