Hi all,
I just settled on my 5th investment property a week ago, and I would like to purchase another one in an area I think has growth potential.
I have borrowed quite a bit and have good equity, however with the recent ‘crack down’ by the government on making the market better for owner-occupiers, there have been additional regulations placed on investors, making the lending requirements tighter.
I have a very good mortgage broker who has given me an option of using a 2nd/3rd tier lender to finance my next property, however they are charging a higher interest rate and I have to move 2 of my existing properties to this new lender. I am reluctant to do this.
The other thing in the equation is that I own one of investment properties 50/50 with an investment partner – the issue is that I can’t use the equity in that property for my new loan (but have to take full liability).
Given my situation, does anyone have advice on how I could finance my next investment?
Cheers,
AjayGreat work, good equity??? then if you have everything good you should of set yourself for the next purchase?
or is there one of the properties that you can build equity to draw from?more info would help
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
Hi Ajay,
A few queries come to mind:
1. What is the ‘higher interest’ that is being offered?
2. Why would you need to refinance 2 other properties to the potential new lender?
3. Do you require the release of equity from an existing property? If so, perhaps your JV partner agree to both of you top up the existing loan so you both pull out some equity?
Also, not all lenders will assume you have full liability on existing mortgages when calculating your borrowing power. Some will take into consideration 50% of the rent (well, 40%…) and 50% of the debt.
Cheers,
EthanEthan Timor | Aligned Finance Pty Ltd
http://www.alignedfinance.com.au/
Email Me | Phone MeActive Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)
Realistically if you want to continue borrowing to invest the things you can do to open up more borrowing options are:
*either buy out your investment partner of their 50%, or sell your 50% to them
*increase your personal income
*cancel any credit cards/personal debt remaining
*either switch as much debt as possible to P&I OR IO – depending on the specific numbers for your situation which is bestIn the end the best advice for your situation is going to be highly specific, so the internet isn’t going to help you. Best bet is to ask your broker, or if they can’t help you to speak with an investment focused mortgage broker.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Ethan,
Interest rate is around 5.2% so as you can see very high.
I don’t know why I need to refinance the other 2 but possible it is due to the fact I always borrow 105% of property value (I don’t put money down), so they are taking equity from other properties to fund 2 separate loans (one for the property, other for stamp duty and closing costs).
Point 3 sounds interesting and I wil confirm that with my mortgage broker… sounds good.
extending loan terms to 30 years if possible can help
Changing from IO to PI can also help
Other than this it is maximising income.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
HI Terry, I’ve moved all mine to PI except for one.
Hi Ajay,
5.2% is rather high for full doc. Not sure what’s the story there…
I do hope your broker doesn’t intent to cross collateralise those loans(!) but it does sound like that’s the plan? Hope not. You should be able to refinance existing loans as stand alone and then use those funds for the deposit and purchasing costs. That’s the way I would have done it. Saves a ton of potential trouble down the line 😇
This is indeed a general discussion/advice as one needs to have all details to provide specific advice but hope this helps? 👍😎
Best regards,
EthanEthan Timor | Aligned Finance Pty Ltd
http://www.alignedfinance.com.au/
Email Me | Phone MeActive Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)
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