Hi All,
have read a lot about not using your own money and leaves me wondering about where all the reborrowing leaves you…?? Do you actually ever own the real estate, or just a percentage of lots of real estate??Anyway – have a question,well a few actually… for a patient person.
We have no PPOR. We have purchased our first IP with 20% deposit and we spent another $5,000 of our own money to make it comfortable and in good repair.
We have a second-hand carport and council approval to erect it. However, our circumstances have changed and there is work involved in making it the right size and then to erect it. Plus as we have moved the carport is now in one direction and the IP in another !! So we are looking at buying a new one and paying someone to erect it. We have enough funds to do this, however can we borrow this money?? And do we need a licenced valuation to do it, and what would this approx cost be??
Also, we are looking at IP NO2, is it better to redraw on our IP1 loan for this and how does this work??Our IP was 75, we put in 17 and spent another 5, an agent has valued it now at 90-94 (3 months later). It rents for 135/week. We know we can add more value by painting the outside and adding a little porch at the back door, but wanted to wait till we see some return coming in as it’s only had a tennant for 3 weeks & PM had first two weeks rent!!
IP2 we are considering is 80-85 and would return 140/week, so obviously we’d be offering less than the asking price. It only needs the TLC in the garden and BIR’s to improve it.Sorry to be lengthy but we feel wev’ve lost our way a bit and would appreciate some direction. Spend lots of time reading on this site and really appreciate those who answer these questions.
Thanks, Diane
Hope that’s enough info [?]If you go to borrow the money agains the property, the bank will probably want a new valuation before they lend it.
At 90, a bank will happily lend $82K. You could use this extra to do the carport etc. and/or use what’s left to put down the deposit for the second IP.
Cheers
MelDiane,
Lets see how we go with some answers.
have read a lot about not using your own money and leaves me wondering about where all the reborrowing leaves you…?? Do you actually ever own the real estate, or just a percentage of lots of real estate??
Well you will own everything less the mortgage. As values rise and with inflation the mortgage will be less and less in real terms. Your investment should increase.
Anyway – have a question,well a few actually… for a patient person.
We have no PPOR. We have purchased our first IP with 20% deposit and we spent another $5,000 of our own money to make it comfortable and in good repair.
We have a second-hand carport and council approval to erect it. However, our circumstances have changed and there is work involved in making it the right size and then to erect it. Plus as we have moved the carport is now in one direction and the IP in another !! So we are looking at buying a new one and paying someone to erect it. We have enough funds to do this, however can we borrow this money?? And do we need a licenced valuation to do it, and what would this approx cost be??You can borrow this money and it will be tax deductible. The lender will organise the valuation if they require one. Which lender are you with?
Also, we are looking at IP NO2, is it better to redraw on our IP1 loan for this and how does this work??
If you have paid above the repayments into the loan then you can redraw it. Contact your lender and they should do this for you. This money can be used as your next depoosit. If it isn’t enough then you can ask to top up the existing loan.
I hope this helps.
All the best,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Mel and Simon,
I thought you 2 might be the ones to tackle this and many thanks.
At present we are with Com bank.
We owe 60 and the loan repayments are about 87/week,which we have been paying off at the 135/week for 3 months ourselves as we have all the other costs like rates & insurance factored in so we thought it would get us ahead a bit. Now the tennant will pay it.[
]So do we have enough equity to go for IP2?
Thanks again, Diane
Hi Diane
On a 80% of value, the bank should lend you $72K. Oops, just noticed I said $82K in my first post.
So the $12K would be what you could get from them, less costs of course. It may be enough to purchase a property worth about $50-60K, but you might need to put in some of your own money if you want an 80% lend on a higher valued property.
It’s certainly a good start though, and LMI might be the way to go if you wish to buy another.
Cheers
MelThanks Mel,
and LMI is…………???
If it’s loan mortgage insurance we have that.
Thanks, Diane
Lenders Mortgage Insurance. If you want to borrow more than 80% of the value, most lenders will hit you with this fee – it covers THEM if you default and they don’t recover all costs from a forced sale, and the insurer will come after you. [
]Cheers
Mel
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