I am enquiring wether there is any reason that I shouldn’t borrow 100% of the purchase price along with initial setup costs, legals, stamp duty etc when buying the positively geared properties.
I currently have equity in other residential buildings so that should not be a problem if security is needed.
[:0)]I see no reason why it’s a bad thing if you’ve done all your research etc.
The only thing that I would advise is to get a loan for the deposit and costs from your spare equity as a second loan, and only get 80% against the new property. This will avoid cross collateralisation, and perhaps save you from some hassles in the future.
Cheers
MelThis is a good strategy if you have any non deductible debt. Use any deposit to reduce or eliminate it then borrow as much as possible for the IP.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Guys,
Using Mel’s suggestion, i.e. Use equity for 20% dep and seperate 80% loan for IP…..
Can both loans be with the same bank and still avoid cross collateralisation? Or will the bank still have some claim if one loan defaults?
Thanks,
Sue [
]“Be careful not to step on the flowers when you’re reaching for the stars”
No the bank cannot automatically claim cross-collateralisation but if servicing is tight it’s better to go to a separate bank as Bank B will take the existing debts to Bank A at face value whereas if loan 2 is with Bank A they will probably apply an interest rate safety margin on both loans even though they aren’t cross-collaterised and reduce your servicing capacity.
If servicing isn’t an issue it may be worthwhile staying with Bank A and getting a professional pack discount based on total loans with bank although some have restricted this to a ‘per loan’ basis.
I’d get your current bank to do up the figures to stay, then take them to a broker and see if they can better it elsewhere.
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]
Mel
[email protected]Thanks Mel, I appreciate your detailed explanation,
Cheers,
Sue []“Be careful not to step on the flowers when you’re reaching for the stars”
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