Hi all
We are currently searching for our first investment property and trying to decide the best finance setup. Our current PPOR is valued at $500 000 and we have $30 000 owing. There is $173 000 redraw available. We are looking for an investment property within the $250 000 price range. I feel like this is complicated a little because we are also moving and want to buy another PPOR (maybe around $600 000) and will sell our current PPOR.
Anyway we are thinking that we can use $140 000 ($120 000 + $20 000 purchase costs) of the current PPOR redraw as a deposit for the new PPOR but I am unsure what to use for the deposit of $60 000 for the investment property? For example if we get a separate $60 000 loan with our current PPOR bank (St George) to use as a deposit with loan from any bank,, would this need to be secured against our current PPOR and if so, what happens when we sell?? What are options could we consider
Thanks, Liz
G'Day Liz,
A separate account would need to be established against the PPOR for $60,000 to use as a deposit for the IP purchase (sounds like you are wanting to avoid LMI which is fine). Therefore, you will have 2 separate loans. One for $30,000 and the other one for $60,000 both against your PPOR.
Now if you sell you PPOR then you will be repaying both loans and having a surplus that will be used as a deposit for the future PPOR purchase.
Flexibility is required in such a scenario so a variable is better suited than a fixed loan.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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