How equity contributes to home loan?

Thanks Jamie.

My current home loan account is an offset account type, which I can access my money anytime, in this case, can I just take out the 20% from this offset account without increasing the loan of my current property? I then borrow the 80% from a different bank?

Cheers,
Lamp

Hi guys,

 I am so glad that I read Jamie’s advice before seeing the bank manager yesterday! The manager told me that I can borrow in two ways; 1. Borrow all from their bank; 2. Same as what Jamie told me J Initially, I didn’t quite understand why, but after further elaboration from you guys and my digestion system worked over night (couldn't sleep), it makes more sense to me now, I’m so happy that I’ve learn new thing. Thanks guys.

I just got my current bank HSBC approved to lend me 25% of the proposed value of the potential IP today. I am thinking that the 5% (in case) may be used for renovation and other settlement costs. Westpac is happy to lend me the 80% as well J

Now it comes to the next challenge, I was initially considering IP from the National Rental Affordability Scheme (NRAS), put a posting in another thread and got infomation from Jamie too , this scheme is still very new to Victorian, currently, new development will be started in Casey, Victoria, and expected completion in Aug 2012 (17 months later), I’ve looked at the information from the developer, the apartments look very nice (cost about $370K) and I drove to the suburb to learn about the area after work yesterday, not bad either. But I learned from Steve McKnight’s books and other members of this forum that mostly investors talk about purchasing old IP and renovate to leverage the value in order to rent / sell. I’m also considering old units and renovate. My query is which in fact is more sounded? Old unit (under 350K which requires renovation and look for tenant, current area I'm looking should not be short of tenant, but the rental will not put me in a postively geared position, I cannot afford to look for other suburbs due to budget) or new apartment (approx. 370K) with rental guaranteed but government restrictions and new concept?? Initial thinking is to hold the property for 5 years then revise if sell or keep.

 Cheers,

Lamp

Additional information:
If I go for the structure as suggested from you guys the interest allocation will be as followed:

Increase amount borrowed from existing mortagage (from HSBC) and split into 2:
Split 1 – existing mortage – no change
SPlit 2 – 25% deposit to be used towards the IP (interest rate7.8%)

Then borrowint the 80% from Westpac (interest rate 7.16%)

I want to know what is the IMPLICATION of what the HSBC manager suggested to me today to go for ther package of open a separate Investment Loan to borrow 100% of the value of the IP (no lender insurance is required), monthly interest is discount from 7.8% to 7.17% which the monthly repayment works out to be $1995.

Thanks Lamp

I agree with you Jamie, if we want to properly invest, we should always have experienced professionals in the area to guide us. I wish you are in Victoria Jamie. I am now putting a pause, no point to rush into investing in IP unless I have a team of professionals as suggested by you, even my world of investing in IP is very small in comparison to most investors. I am going to find some good accountant, mortgage broker and financial planner in Victoria   You guys are brillant, just in the last week, I have already learned so much from your advices and help. I know that there are far more for me to learn but you guys have open another level of my thinking. Thank you