The next step

Which state are we talking about? Whats the postcode? How are you calculating equity? 

Regards

Shahin

Hunter Valley is a massive area so you need to speak to your banker or broker to check that there are no restrictions on postcode but I highly doubt that there would be so you should be ok. 

You are also calculating equity correctly which is great. 

You shouldn't have any issues with finance and the application seems straight forward. Keep the facilities separate/standalone and have a linked offset.  

Perhaps get some upfront vals to double check the equity.

Regards

Shahin

Re postcodes it depends – some banks will not lend to some postcodes and other will have restrictions on either the LVR or the loan amount or both. Double check but you should be fine. 

Re structuring the loan – this is the set up:

Property 1:

PPOR Value: $400K (example)

PPOR Loan (a/c 123): $280k (example)

Loan 2 – Deposit for other purchase (a/c 456): $40k

Total LVR: 80%

Property 2:

IP Value: $190k

IP Loan: $150k 

Total LVR: 80%

Therefore you will have 2 new loans one for $40k against your PPOR and one against the IP itself. 

You can do this with different lenders but with those loan amounts you are better off with one lender. Shop around and see if there are better deals in the market. Using equity doesn't affect the PPOR if you do it as per the above. Depends on if you are going to convert the PPOR to an IP. If no then best to park all available funds against the PPOR since its not tax deductible.

Regards

Shahin

No issues with 10% but what are the costs you are referring to re 'purchasing costs'? Do you mean stamp duty costs, tc?

Regards

Shahin

In short if you are purchasing a property for $190k in NSW with a $40k deposit then your LVR is almost 82% and the LMI would be around $800. You can capitalise this on top of the loan. 

Therefore the costs are not as much as you think. The other costs would be the conveyancing costs which is around $1,500 and the Building and Pest Inspection Report which is $500. 

What is the loan against your PPOR? Also if possible get an upfront valuation on the PPOR to ensure that you have the equity that you need for the IP purchase.

Regards

Shahin

Hi Paul

Welcome aboard.

With $40k, it's not going to cover a 20% deposit and costs on a $190k purchase as you've alluded to. It would be in excess of $45k at least when you take into account stamp duty, legals, ect. 

However, that's not the end of the world because a lend higher than 80%  for an IP  in the hunter shouldn't be an issue from a location perspective. We've financed heaps of them for forum clients over the years.

You mentioned interest rates in one of your posts above. If sticking with the same lender for the IP loan, then you should be getting at least the same rate or lower. When your total borrowings go up with a lender, you can often negotiate on the rate – your banker/broker should be able to arrange this on your behalf.  

Also, think about your longer term plans and what you're aiming to get out of property investing.

If you're looking to purchase multiple properties in the near future then maybe look to hold back on spending the entire $40k on the first purchase and retain some for the next.

You may even consider accessing more equity in your PPOR – but then you need to look at how comfortable you are with risk.

There's lots to consider.

Cheers

Jamie

Hi Paul

Which lender is your current PPOR with?

Cheers

Jamie

Excellent, they'll do upfront vals. Ask your broker/banker to arrange for you.

Cheers

Jamie

Yep, you could be right there.

Paul, what's the actual value of your property and what is the loan amount?

Cheers

Jamie