Hi all,
I’ve had a broker advise me that I have $22,000 of accessable home equity – he gave me a few options on accessing this through refinancing, redrawing etc. But I said that I would not put my house up for security against an investment property, but have one property as security against one loan. He said this is possible.
I’m simply looking at all options open to me to use my $22,000 equity safely in purchasing my first investment property (positively geared of course!!) Any help will be appreciated.
Thanks.
G’day Chris…
The $22,000 accessable equity is obviously based on todays prices. You may find that the equity you have in the property will reduce somewhat over the next year or two as prices level out if not fall.
Assuming that an Investment property was to be financed at 80% and you only have $22,000 available as 20% deposit and costs, it appears that you can purchase up to about $75,000.
Unless you have a few tricks up your sleeve or intend buying in a country town, you may regret that descision after 6 years of solid growth already behind us.
I also suggest that the Broker is not doing you any favours with his/her suggestion. The term churning comes to mind.
You must realise that your $22,000 is going to mean your home is being offered as security. If not you are talking of 100% finance plus costs.
If I was you I’d give it a big miss. If you felt confident with your broker I don’t think you’d be asking advice on the Forum… follow your gut feelings…I think you already know the answer.Cheers
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Thanks, bill, for your reply. I’m in the research mode of property investment and have found a few positively geared commercial properties starting from the $155,000.
I have other souces of income, but was just bouncing around this idea of using my equity to help. I actually have $57,000 equity, but based on the 80% loan rate etc. I can get a line of credit (at home loan rates) of $22,000 to $24,000 secured against my house. I’m considering using this as a deposit for a loan secured against an investment property not my house – which I’ve been told is possible. From my calculations an 80% loan against a property would give me a starting price of $110,000 (20% of 110,000 is 22,000). With other sources of income etc. I can raise my purchasing ability.
Can anybody see any flaws in this logic?
Chris
That sounds like the best way to do it. ie a separate LOC so that your house is not used as security for the IP.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi ChrisHall,
You haven’t included the closing costs for you IP which will added up to about 10%, which mean you will have only $12K and not $22k. If you are willing to pay MI, you might be able to borrow up 95% of the purchase price. The catch is, MI itself is quite costly.Cheers
[8D]
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