All Topics / The Treasure Chest / Borrowing 100% vs 80%

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  • Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225
    January 7, 2003 - 12:35 pm

    Just a question guys…
    What are the advantages of borrowing only 80% from the bank compared to borrowing up to 100%. Borrowing 100%, you would be charged more interest from the bank and all this would be tax deductable…. so if you have enough equity to borrow 100% wouldn’t this be the better option?

    Profile photo of PaulOSPaulOS
    Member
    @paulos
    Join Date: 2002
    Post Count: 3
    January 7, 2003 - 1:26 pm

    Hi Angie
    The first thing that springs to mind is the one off Mortgage insurance cost and depending on the size of the loan could be several thousand dollars. You would also have to keep an eye out for the right property with regards to price and return so that you are not financially strung when interest rates take a turn for the worst. But apart from that the less of your own money that you have to use the better!

    Cheers

    PaulOS

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225
    January 7, 2003 - 2:53 pm

    Thanks for that PaulOS.

    Also, another thing… the more that you put out in deposit, the more income you have and so the more you get taxed! That’s like a double whammy! You don’t get the tax deduction and you taxed extra for the extra income!

    Tomorrow, you might wish you started today.

    Profile photo of NealNeal
    Member
    @neal
    Join Date: 2002
    Post Count: 8
    January 8, 2003 - 2:45 am

    Keep in mind I am a newbie to this and am reading and finding out as much as I can. The only comment I have is: According to Steve and others, banks feel more comfortable lending on 80% lends when multiple deals are taking place. ie If this is something you plan to continue doing, then you may have trouble securing finance with multiple properties at high % lends. Forum members please correct me if I am wrong.
    This of course on top of the mortgage insurance issue.

    Good luck to us all.
    Neal

    Profile photo of wattowatto
    Participant
    @watto
    Join Date: 2002
    Post Count: 50
    January 8, 2003 - 12:28 pm

    G’day Guys,

    LMI need not apply when using 100%+ finance on a deal.

    The use of a LOC account secured against another property will allow you to make up the difference between the 80% lend from the bank.

    cheers
    watto

    Cheers
    watto
    Melb Freestyler

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