hi everyone,
this may sound a simple question but I cant find anyone to tell me the answer in simple terms. my question is how do I know if I have enough equity in my home and investmant property to purchase a new investment property. and can some one tell me what loan to value is and how to work it out.also is there another way to have your house valued other than having a valuation report done, what i mean is there guid lines so I can do it myself and get a close estimate.I already follow the real estate pages and see what people are selling their houses for but i never see the end result to see what the property actually sold for.Hi Gazza
I’m new to this forum, so I apologise if I shouldn’t be answering your question. However, I hope I can provide some clarity…
Equity required for new IP
Equity is equal to the current value of properties minus any outstanding mortgages. With that in mind, then you should be able to access up to 80% of your properties value minus any outstanding mortgages from the majority of lenders with ease.Once this figure is established, compare it to the deposit required and closing costs of the prospective investment property. The aim being to use your current equity to cover these costs and to take out a new mortgage on the new investment property.
Loan to Value
Simply the amount of the loan as a ratio of the value of the property. Therefore, as 1(loan):2(value) is equal to the value being double that of the loan, all that is required is to divide the value amount by the loan amount.Valuation
You seem to have grasped this concept in whole. There is no scientific way to provide a valuation as it comes down to supply and demand. So your best guide will be the real estate pages, with actual sales figures available from websites for a small fee grouped into different classes.Hope this helps in some small way
my question is how do I know if I have enough equity in my home and investmant property to purchase a new investment property.As Jester said, you subtract mortgages from value. However, to work out your ‘available’ equity, which is what the banks will lend, you need to subtract your mortgages from 80% of the value. Banks are generally happy to lend at 80% LVR (ie 80% of the value), so it’s a good starting place.
also is there another way to have your house valued other than having a valuation report doneYes, ask three real esate agents to come and do an appraisal of your house. It won’t be accepted by the banks, but it will give you an indication. Also ask them how they’ve come to this figure, and ask for recent sales to back it up. When you have these sales, and you do need a valuation for borrowing purposes, you can provide them to the bank’s valuer to help justify why your place is worth $x.
but i never see the end result to see what the property actually sold for.Ring the agents and ask them what it sold for.
Cheers
MelDon’t forget that LMI will let you take the LVR up to 95% if required.
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.
Hello Simon
I have justed purchased a property for $127000 with a 5% deposit using LMI. If my property was to increase in value to $140000-$150000 could I use the extra $13000 – 23000 equity, along with LMI to purchase another property ?
Sorry if the question is silly, but I am a newie.thanks for your help
MattIf the total loan to valuation ratio is lower than 95% then it may be OK. Will depend on other factors too such as income, loc of properties etc.
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.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
