Am currently in looking at refinancing our home loan and adding a LOC to fund new investment property purchases.
If we fund the deposit on the investment properties through the LOC will the bank providing the loan for the balance of the investment property mortgage require as to have mortgage protection because the property will essentially be 100% financed under this structure? If so this will be quite costly – the alternative would be to use equity in our home loans and simply refinance the investment property in one or two years when it has hopefully grown in value enough that it has sufficent equity not to require cross collaterisation.
Have used the equity in our home previously but keep reading that this is really bad and am uncertain as to why. None of the investment property books or magazines have provide any insight.
Does anyone have any views on this and the pros and cons of these options or any other alternatives?Would really appreciate the help.
Cheers
intouchHi Intouch
First welcome to the forum and I hope you enjoy your time with us.
When accessing equity in your property you need to ensure that you structure the loan correctly to avoid any issues down the track. There is no reason why the lender will require mortgage protection although one or two do try and encourage you to take out such a policy as of course in increases their commission coffers.
There are a couple of ways in which we structure loans for clients doing what you are trying to achieve but either way flexibility is key and also it is essential that you protect both your PPOR and yourself over the Bank.
Your Mortgage Broker should be able to give you some solutions to achieve a balance.
Richard Taylor | Australia's leading private lender
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