I'd be interested to know how banks handle requests for increasing the loan on existing mortgages. Not just redraw but almost like a refinancing.
What would a bank need to go through to up a loan say from 100k to 300k (and provide me with 200k) on an investment property which is now worth 400k but was initially bought for 160k?
Would they ask what the use of proceeds is? Why, and what is the difference in consideration for say, spending money, down payment on a new property, construction/renovation of another property.
I take it a new valuation would be required?
Would this have to result an a new loan application, with the associated costs of a new loan setup and closing out an existing loan early, or can an existing loan relatively easily be amended, involving lesser fees?Sounds like a refinance job – they will need new financials, some idea as to what you are using the money for, how you are going to fund repayments etc.
If you are buying another property, why not take the loan out against that one and use your LOC or redraw to pay the the deposit?
Pdv
Yes an increase would be considered as a new loan and for all intense and purposes the lender would start again.
One of the biggest differences is the fact that most lenders are very cautious these days as to what you want the "Cash Out" funds for.
Your mortgage broker however should be able to guide you around the maze.
Richard Taylor | Australia's leading private lender
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