Ok you have a few options but it comes down to the strategy that you are confortable with. When I mentioned development – I will give you a quick example. I purchased a property 2 months ago in Newcastle near the uni. It was for $330k and it was a 1000sqm block. The rent is $370 per week. It is negatively geared by quite a bit however i am in the process of getting DA to build 3 additional dwelling which will turn the property into a positively geared investment. Again it comes down to what you are comfortable with and how much time you are willing to put in. Getting this DA has been a massive headache. 

Regards

Shahin

They are super conservative and servicing may be a bit tight. That is because they are a building society. 

Regards

Shahin

I would do the following:

1. Since you have paid LMI already stick with your current bank and draw upon the equity. Do this by creating a separate loan account. So you will have 2 loan accounts, one in the amount of $329k and second in the amount of $70k. I would have the second loan as a std variable with a linked offset and have the funds sitting in the offset until such time as you find the new IP.

2. Take out a loan for 80% against the new property – this could be with the same lender or a new lender. It comes down to what is the best option. 

One thing to consider is post this IP – if your longer term strategy is to purchase more properties then you may want to consider borrowing at 90 or even 95% lend on this pruchase so you have enough cash/equity on the next purchase. LMI on a $250k purchase at a 95% is not huge and it is tax deductible for the first 5 years.

Who is the current lender?

Regards

Shahin

Right and now for the cons of OTP:

1. Valuation could come back lower upon completion which means you are stuffed

2. Strata is going to kill you and it will only increase

3. Quality of worksmanship is unknown until the unit is complete which in most cases is too late

4. In many years time you new property is not different to the property next door which is about 4 years older than yours

5. Most are overpriced to begin with

Your strategy isn't bad but you need to be wary of the bad (not just the good) when looking at OTP.

Regards

Shahin

You can go to 70% but its has to be an A+ Application.

Regards

Shahin

I just don't believe they are mate – I think there is something thats not right in your calculations.

I didn't understand the last part of your question – what do you mean by 'having zoning'? What type of zoning in particular?

Regards

Shahin

I will buy you a 6 pack if you can find a unit in Guildford that is not negatively geared.

Regards

Shahin

What is "IR"?  

Also you say Guildford is not negatively geared – how are you calculating this exactly because it doesn't sound right to me.

If there is an over supply why do you think this will drive prices up?

Regards

Shahin

What do you mean by current credit rating? What is wrong with it?

Regards

Shahin

Couple of things in point format:

1. Why are you paying 5.81% – you should be getting a much lower rate. Call your bank and be put through the discharges team. Negotiate a rate of around the 5.50 mark. It will save a bit per month.

2. Some lender do offer offsets on fixed loans (such as Adelaide bank). Alternatively and a more common/simple strategy is to do a split loan. For example, fix $459k for 3 years and have $100k in variable with the linked offset. 

3. Pay off the bad debt first which is the credit card before anything else. Have you considered a balance transfer on the c/c?

Regards

Shahin