All Topics / The Treasure Chest / EQUITY REQUIRED TO PURCHASE IP

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  • Profile photo of FALCONFALCON
    Participant
    @falcon
    Join Date: 2003
    Post Count: 20
    September 18, 2003 - 8:32 am

    I bought my first home two years ago i have a mortgage of $90 000 property is valued at $130 000
    it is my primary place of residence what my question is how much more equity will i need to build before i can borrow against it to buy a positive (hopefully) IP of around $50 000.

    is there some rule/calculator i can use?
    i live in semi rural area of wa im only 22 but would like to get into a IP as soon as comfortable possible.
    thanks

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    September 18, 2003 - 8:41 am

    Provided you have the income to service the debt you can buy it now.

    Rule of thumb is to allow 20% equity, so your total portfolio of $130K plus $50K will be $180K. You may have up to $144K debt against these properties.

    This may be increased to $171K with the payment of mortgage insurance.

    Hope this helps,

    Simon Macks
    Mortgage Hunter
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

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