Hi Luke

How much are you looking to spend?

I know that the eastern burbs of Sydney aren't particularly cheap so you need to get a good idea of what your borrowing capacity is.

If purchased as an investment property, the rent received from the property will help bolster your borrowing capacity.

Cheers

Jamie

Not at all. There are competitive rates at 95% LVR – you don't have to pay a premium for a 95% lend.

The main point is that getting a 95% lend approved is not always a walk in the park so you shouldn't focus on getting the most competitive rate – rather focus on being placed with a lender who is actually going to do the deal.

Not all lenders provide 95% lends and there's a range of different policies, etc to navigate through. Therefore (and yes it sounds biased) but perhaps should consult a decent broker.

Cheers

Jamie

Another thing to mention is that some lenders only operate via the broker channel.

In any case, you should be satisfied with just getting a 95% deal approved rather than worrying too much about the rate.

Cheers

Jamie

It can sometimes be a drain on cashflow as you may have to make repayments on the land loan and the progress repayments whilst not receiving any rent.

Cheaper stamps though – as you're only paying on the land.

Cheers

Jamie

I don't think that's the underlying reason – it's probably closer to what Derek mentioned above.

Cheers

Jamie

ANZ are quite competitive in the 2 year space.

It's an interesting time with fixed rates – I don't have a crystal ball but my hunch is that they may not stay this low for much longer.

Cheers

Jamie

Hi Louise

No worries at all. I'm glad that you find the information useful

As you said – ask the lender if converting to an IO product with an offset is a possibility. There might be a small fee involved but it's worth it.

If not, and if you used at least a 20% deposit, then it would be worth while looking to carry out an external refi. There will be some costs involved, but at least you won't be slugged with a Deferred Establishment Fee (DEF) for leaving as your loan settled after the new law passed banning DEF's.

Given that this is going to become an IP – you already know that it doesn't make sense paying down the principle and redraw is a big no no.

Cheers

Jamie

Hi there

Welcome to the forum.

It’s difficult to comment without knowing the numbers but from a finance perspective, if you have enough usable equity I’d certainly opt to use that as your deposit/costs for your next IP rather than use your cash savings.

This way, you keep the entire IP debt tax deductible and also preserve your cash savings (it’s always nice to have some cash stored away when building a portfolio).

Cheers

Jamie

I think they'll drop. But I've been wrong before.

Cheers

Jamie

No – they are different products.

Cheers

Jamie