Can I buy a property with 100% borrowed funds?
Yes it is possible to do this without paying Lenders Mortgage Insurance (LMI).
Normally we will do this in the following way:
1. Borrowing 80% of the new property value secured against the new property (to avoid LMI)?
2. Fund the extra 20% (or 25% including purchase costs) secured against another property you own (if possible)
We suggest this is a great way to fund the property for the following reasons:
A. borrowing costs are currently low (staring from 1.79% pa for home loans)
B. creates a negatively geared investment
C. maximises your leverage to enhance wealth created
However there are risks with a high amount of borrowing. These risk can be managed as follows: • having sufficient cash flow to meet loan repayments (interest only loans can assist) • having contingency funds just in case • protecting against interest rate increases
Are you interested in buying a new property with 100% borrowing? Feel free to get in touch on email@example.com to discuss further.