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Tj T.
Tj T.
Brookside Centre, QLD

I am looking at selling my current PPR and buying a bigger PPR? This property is used as security for two investment properties. How should I go about it to avoid a bridging loan and paying LMI, or selling first & having to pay down the investment loans?

8 years ago


Hi, avoiding paying LMI will be down to actual price paid, and actual LVRs so i can't answer without more info. In regards to process though:

You could, with servicing met, just add the new purchase to the existing security pool then sell the old PPR and release.

Or depending on lender you are with just do a variation on your current loan and security substitution.

Cheers Ariel

Hi TJ,
It really comes down to servicing and valuations, your current lender may ask that you pay down some of the investment loans with proceeds of the sale to maintain an acceptable LVR or pay LMI.
As long as you are clear and open about your intentions, most lenders will work with you to achieve the desired outcome.
Find a broker with investment experience and you will be in good shape

Adelaide Bank has a fantastic bridging finance loan which works on your nett loan on completion. This means you don't make any repayments on the whole amount borrowed until you sell your PPR. Provided you can service the loan.

John J Maxwell
0434 544 225
Cocalex Holistic Mortgage & Finance Consulting

Hi TJ,

There are a couple of ways to sell your current primary residence but not have to pay down the investment loans.
You can do this one of two ways:
1) Simultaneous settlement
This works by buying and selling your current PPR as part of the same settlement essentially completing the purchase on your new PPR at the same time as the sale on your current home. This can cause added stress as you need to line up both parties for settlement at the same time.

2) Term deposit guarantee
With this option you allow the bank to hold the proceeds of the sale of your PPR as a term deposit which acts as collateral against the two investment properties until you purchase the new PPR at which time funds are released for the purchase and collateral is taken over the new home.

In terms of LMI, there are a few variables at play such as the current valuations on the investment properties, the sale price of your current PPR and purchase price of the new home which all need to be determined to give a definitive answer.
But generally speaking if the level of debt against the two investment properties is lower than 80% of the value of the investment properties and term deposit combined you will avoid paying LMI.
The lender/broker can work through the numbers and tell whether you have enough equity to make this viable.
I hope this helps, you are welcome to contact me if you have any further questions.

Stuart Christie

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