Unfortunately for Losty he's current PPOR is already sitting at an LVR of 90% so tapping into equity isn't an option at the moment.

Tell me about it! I was comparing YIP and API quarterly growth figures for the same suburb – one said an increase of 17%! The other said the growth was going backwards!

Aim for the win-win. As somone mentioned above, the savings involved by not using a realestate agent may be attractive. Are you planning on keeping this as an IP? If so (and you're not planning on knocking it down) you could, as touched on above, rent it back to her. To give comfort you could offer a long lease.

Hi Lotsy

Your figures look about right.

However, you could get away with contributing less if you managed to take out a 95% loan.
 
Cheers

Jamie

Could be worth while topping this up to 90% and accesing more equity. You'll need to pay some mortgage insurance here but if you can take a much larger deposit into the next deal (the $900k) purchase you'll pay less mortgage insurance on this property. All up, you should be better off in terms of the amount of insurance you have to pay. A good broker will crunch the numbers and work it out.

Yes, if it's being used as a deposit towards an investment property (which this property will be). If it becomes a PPOR it will no longer be deductable.

Not really. You should really convert this loan (and your other IP loan to interest only). Set-up an offset against your current PPOR and place your principle repayments/extra payments in there. Make sure you get a valuation (an appraisal from a real estate agent should suffice) on your current PPOR when it converts into an IP. This if for calculating CGT in the future if/when you decide to sell. 

Hi James

Welcome to the forum.

Here's some info on CGT – taken straight from the horses mouth – http://www.ato.gov.au/corporate/pathway.asp?pc=001/001/038

Land tax may be an applicable holding cost. I just opened up a land tax invoice for an IP in Canberra – ouch

Hi Jonesi

Welcome aboard. It's always good to see another Canberran on the forum

Cheers

Jamie

Thanks for the report Ajay. Some food for thought. Best of luck with your purchase – wherever you decide.

Hi 250k

Hmmm…..sounds like the bank is being a little difficult. I had a client in a similar situation recently. He went to his lender to access some equity and they pretty much told him that unless he was going to finance the next property through them, they weren't interested in valuing his current property.

Depending on your lender you may be able to "top-up" your current loan to 90% of the properties value – giving you access to around $70k (based on the lower end of your estimated property value). It is likely you'll have to pay some mortgage insurance. If you'd prefer to avoid mortgage insurance – you could opt for an 80% top-up but that would give you access to only $23k.

We are operating in a new lending environment at present – that may be a reason as to why the lender is reluctant to provide the "top-up" at the moment.

In any case, an independent mortgage broker that knows the ropes should be able to sort it out for you. If your current lender won't help you out they should be able to place you with one that will.

Hope that helps.

Jamie