Simon wrote:

I am undecided on this as I see benefit in both, however, I am leaning towards the benefit / immediate gains of having the $ to reno etc outweighing the very minor difference in repayments on IO?

It depends on what you’re aiming to achieve.

I work mainly with investors – and a lot of them (particularly those starting out) leverage at 88% + LMI. The LMI is deductible and they can borrow more with less which enables them to be more aggressive with property acquisition.

If you’re looking to hold onto cash for renos – then work out what the end value will be after the renos. That will help work out whether the LMI cost is justified.

Cheers

Jamie

Richard Taylor wrote:

Look to go back to your current lender and do an equity loan.

Agreed.

Your existing lender should be your first point of contact – look at ordering an upfront valuation first so you can determine how much equity there is to access.

If the valuation comes in low then consider ordering another via a different lender- in the hope of getting a more favorable result.

Cheers

Jamie

What sort of default was it?

Cheers

Jamie

Good vibes wrote:

I do not know much about investment properties and I thought if I could somehow get another mortgage on the house and turn it into our investment property it would make a good investment. My husband however says that we can’t do this because our house is mortgage free.

Your husband is spot on.

You can’t take out an investment loan against the property now – unless you use the funds from the loan to actually invest. Only other thing I can think of is a possible spousal transfer but that’s likely to come at a cost.

However – you can access equity in the property to fund the deposit/costs on a new home in your new location.

All in all – you might be able to purchase another home BUT it’s unlikely you’ll be able to obtain any interest deductions on your current investment property.

Cheers

Jamie

AirBnB can work out well.

Only problem is that banks won’t take into account the income generated from an Air BnB property unless you can show a year or two of tax returns. With a normal rental – they only need to see the most recent rental statement or a rental appraisal from a local property manager.

Cheers

Jamie

There’s nothing wrong with buying in a lower socio economic area providing you’ve calculated the risks involved – and not all socioeconomic areas are the same either!

Generally speaking – if you can land an IP in an area that’s prime for gentrification then you can experience some decent growth. Same deal with some fringe areas of capital cities. Look at West Syd for example – detached houses were selling for low $200’s not that long ago…that’s no longer the case!

Cheers

Jamie

Hi Woodlin

Welcome aboard :-)

How are you calculating the equity that you have available?

Generally speaking – when accessing equity we set up a second loan account with redraw. The surplus funds are then dropped into that redraw account at settlement to be used to cover the deposit/costs on your future IP. The benefit of this approach is that interest won’t be payable until you actually spend the money.

Cheers

Jamie

Staging works wonders for the right property.

Some basic cosmetic renos – paint, new flooring, etc can also help.

Cheers

Jamie

I guess it was just a matter of time :-(

Looks like they won’t honour pre-approvals under the old servicing calc for very long either.

Cheers

Jamie

Agree with Corey – changing ownership can be costly. Speak with a decent accountant and crunch the numbers to see if it’s worth the costs.

Joint ownership with a non-spouse can cause huge headaches for serviceability :-(

Cheers

Jamie