Hi all!
This is a pretty vague question but I’ll briefly describe my situation. My partner and I currently own two investment properties, the first is in an inner-western suburb here in Sydney (Roselands), the other in a beachside suburb in Adelaide (Glenelg North). We are looking at buying another property towards the end of the year (August/September) and were wondering what our chances would be.The properties were valued at $500k 2 months ago and we owe the bank $415k. How much more equity would we need to buy another property for around $200 to $250k? We are paying interest and principle on the loan and will hopefully be making regular payments on top of this. I know this is a very rough guide and I apologize, but we’re really excited with our purchases and are really looking forward to our next one. Any help is much appreciated!
If any more info is needed please let me know.. and before anyone points it out.. our properties didn’t meet the 11 second rule lol [
]Hi Newgen,
A refinance at 95% on the current valuation of 500K less the 415K debt, will leave you with 60K for a deposit,
Expect to pay a higher rate, approx 0.3% above the SVR to cover the LMI on a 95% lend.
Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Hi Newgen,
Don’t attempt to have all your loans cross-collateralised with a new lender and mortgage insurer. If you do, your total borrowings would exceed $500K and this can be difficult and expensive. (it would only assessed on a case by case basis – in other words other factors must be strong i.e. income, stability etc.But the killer would be the LMI premium!! If you are not contributing any further funds other than ‘equity’ the overall deal would be above 90% which one mortgage insurer would charge an LMI fee in the vicinity of $15-17K. [8]
Even the MI on the refinance of your existing loans up to 95% only, would attract between $10K – $12K LMI fee. Better though I suppose…
I would do one of two things.
1/ ask your existing lender – if you refinance up to 95% of your current properties, how much extra LMI would be payable above and beyond what you have already presumably paid when you originaly purchased/refinanced?
2/ try to save the 3-5% of the purchase price + costs on the new purchase of $250K then LMI would only be $4K-6K.[
]Hope this helps,
MortMan
[email protected]Some lenders will cover the LMI on a 90% refinance, this is covered by the extra 0.3% above the SVR
In some cases e.g., St George with a strong application will do a 95% refinance with the 0.3%Regards
Steven
Mortgage broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Hi
Not many lenders will refinance up to 95%, 90% is generally the maximum.
Theoretically as long as your overall LVR is 95% or less and you have the income to service the loans then it may be OK. So add up the values of all thre properties and the existing loans together with what you need to finance the new purchase and see what you get.
I get $500,000 plus $200,000 = $700,000 in value
loans $415,000 plus $210,000 = $625,000 in loans
The overall LVR would be 89%.So yes it would be possible to borrow this amount, but you still must have the income to service the loan.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Awesome, thanks for all the replies everybody. It looks as though this may be a feasible goal!
Hopefully in a few months we would have built up enough additional equity and paid off some more of the loan to put us in a more secure position to go ahead with the next purchase. Our loan is through the CBA/Colonial and we’re paying 6.4% interest fixed for 3yrs. We had quite a few headaches with the latest purchase as we had some communication problems with our mortgage broker (to put it politely). I know where we’ll be refinancing next time Thanks again everybody!
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