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Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of MrTraderMrTrader
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    @mrtrader
    Join Date: 2005
    Post Count: 8
    August 17, 2005 - 7:21 am

    Thanks Hellman,

    So is the thinking the same when it comes to general residential property?

    Once you get a few IP’s under your belt, is the bank still “assuming” you need to cover the repayments on every single one out of your income?

    And so basically, it would be better, easier and possibly?? just as profitable to look elsewhere (outside inner city). But in saying that, how do people end up owning inner city apartments? Is it a case of having way too much of their money tied up in them?

    Cheers
    Richard

    Profile photo of MrTraderMrTrader
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    @mrtrader
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    August 17, 2005 - 6:35 am

    Hi Leo777,

    From my understanding through MortgageHunter and grossrealisation here and talking to my broker again, you will be servicing the ENTIRE debt.
    So in your equation below (in theory), BANK A’s loan will increase to 200K and BANK B’s loan will be 185k.

    The 65k equity you drew out and the new 185k loan should be interest only and is deductible.

    In saying that, my broker has also said that not all of your equity is accessible…only 80-90% of the new value of your property (90% if you want to pay mortgage insurance on both loans!) Guys, can you clarify that???

    Cheers
    Richard

    Profile photo of MrTraderMrTrader
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    @mrtrader
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    August 13, 2005 - 1:14 pm

    Thank you Mortgage Hunter.

    Yes I understand now. Sorry just confused me a bit when Grossrealisation said “Equity is exactly that there is no cost or interest on equity”.
    I interpreted that as “no repayments on equity”

    So overall, it’s a matter of serviceability and if you want to be +geared, then finding a property that covers (rents out) the ENTIRE loan?

    Which brings me to another problem? How the heck do you do that with prices the way they are these days? I can find apartments in my area whose yield covers the loan repayments but then throw on top of that body corp and other costs, and it blows out and turns into -geared (which I don’t want)

    Profile photo of MrTraderMrTrader
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    @mrtrader
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    August 13, 2005 - 12:36 pm

    Hello Mortgage Hunter,

    Thanks for your reply.

    This is where I get confused however…the 50K that I withdraw (seemingly from thin air – ie. an increased valuation of my property)… do I repay this to the lender AS WELL as the other 150K I would have on loan for the IP???

    Here is my story in brief:
    MY PROPERTY:
    purchase: 155K
    loan: 139K
    outstanding loan 135K
    value of property now: 185-200K
    Seeming Equity: 50-65K

    So while I have repayments for the 150K on the IP, do I also have repayments on the 50K added to my home loan AS WELL???

    Cheers

    Profile photo of MrTraderMrTrader
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    @mrtrader
    Join Date: 2005
    Post Count: 8
    August 13, 2005 - 12:19 pm

    The place in my building would only go for around 200K (small 1 bedder) but could rent at probably $250/week.

    If I use my 50K as a deposit, that would be 25% of total sale which should be ok for lending mobs shouldn’t it?

    Thanks!

    Profile photo of MrTraderMrTrader
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    @mrtrader
    Join Date: 2005
    Post Count: 8
    August 13, 2005 - 11:58 am

    Hi Grossrealisation,

    Thanks for your answer. Well that’s what I thought BEFORE I went and saw the broker.

    I thought that if someone had equity built up either through repayments or increased valuation, then that was there’s to draw out without having to pay back?

    So basically if I have roughly 50K equity in my current home, I can use that as a deposit on another property? And I will only have the cost of the IP loan to cover?

    Thanks again!

Viewing 6 posts - 1 through 6 (of 6 total)