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SpeedRacer
Member
@speedracer
Join Date: 2005
Post Count: 7
May 31, 2005 - 3:20 am
I got $200,000 from the $40,000 equity in the first property (Value $120k minus amount on loan of $80k).
$40k being the deposit to get the loan of $200k.
If the person had this $40k in equity, couldn’t he buy another property worth up to $120k so the total of his portfolio is $240k (using $40k equity as a deposit for the $200k loan). He would have a loan of $200k but own $240k in property.
Cheers,
Nigel
SpeedRacer
Member
@speedracer
Join Date: 2005
Post Count: 7
May 31, 2005 - 2:35 am
Oops, I didn’t explain that very well.
The situation involves two properties – one they currently own and looking at purchasing a second one. These are not real figures but I’m trying to work out some concepts. Probably very easy for some people but I have to start somewhere.
Amount owed on existing property – $80,000
Today’s value now – $120,000
So that leaves $40,000 in equity to borrow against for another property. Is that correct?
With a loan-to-valuation ratio (LVR) of 80%, that means you could borrow a total of $200,000 (using the $40,000 equity) without paying LMI ??
So the person in this situation could purchase another property worth up to $120,000 without paying LMI?
This does not account for legal, stamp duty and other purchase costs.
I hope that makes better sense.
Cheers,
Nigel
SpeedRacer
Member
@speedracer
Join Date: 2005
Post Count: 7
May 30, 2005 - 4:59 am
Hi Everyone,
Wow – This info has changed my perspective alot and given me more flexibility.
The first property I have bought is negatively geared and returns about 4.8%. I always wanted to get more property but did not think I’d be able to get more financing.
I would like my second property to be positively geared so that it offsets the first one. This means I can look into get more property after the second because I will be in a better position. That’s if everything runs smoothly and the next property gets rented quickly.
What are some names of some good mortgage brokers in Wollongong or would service this area?
Does anyone know of some good financial planners in Wollongong or should I should I head to Sydney so that I can get some advice / direction?
Cheers,
Nigel
SpeedRacer
Member
@speedracer
Join Date: 2005
Post Count: 7
May 26, 2005 - 8:46 am
Nice reply Mortgage Advisor!
I gave ING Direct a phone call and have offered a hansome package which will allow me to buy more properties. They are offering up to $800k @ 6.74%. Will still look into it further but it gives me some flexibility knowing that I can get financing. I’m not looking at refinancing before the financial year. I’m going to do some more shopping and more research and look at refinancing in the new financial year.
What other suggestions do you guys have for mortgage people?
I still can’t believe ING offered nearly $800k. I just want to get a few small low risk properties under my belt first.
Cheers,
Nigel
SpeedRacer
Member
@speedracer
Join Date: 2005
Post Count: 7
May 26, 2005 - 1:14 am
That’s the response I was after. I talked to them this morning about this and still stuck to their argument that it’s better to pay more interest to get the tax savings than to pay less interest and abit more tax with more money in my pocket. I then said what you guys said that I might as well give money to charity because that’s tax deductible as well.
I don’t know how else to explain this to my friend.
Does anyone know of some great simple material I could get my friend to read? They read the negative gearing article and thought it was great that he could get five properties. My thought is that if he positively geared the property, he’d be able to buy even more houses.
Cheers,
Nigel