finance explaination

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micheal
Member
@micheal
Join Date: 2002
Post Count: 6
December 29, 2003 - 8:46 am
this may seem obviuos to the more experienced. i have a pi loan of 194000 on my home value approx 300000 if i use the equity in this home does the loan go up to %80 of its value or does the investment property carry all the cost (ie) fully financed
Julian2
Member
@julian2
Join Date: 2003
Post Count: 82
December 29, 2003 - 10:27 am
Michael,
Most likely the total you can go to is 80% of the value of both properties, but will depend on ability to finance, which may depend upon your investment property being positively geared for 100% financing (assuming you don’t have a deposit for the additional property), or on you having a substantial and secure alternative income stream. Your home loan is currently at about 65% of its value. That would give you about $45k of equity (15% of $300k) to apply to another deposit – meaning you could (theoretically) have up to $225,000 to spend on your IP, less the costs of purchase if you don’t already have those funds set aside.
No doubt the mortgage brokers out there will correct me if I have got this wrong, and being as I’m from different country I may have.
Good luck, Julian.
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
December 29, 2003 - 12:29 pm
You can do either.
Easiest and the banks preferred solution is to put up your house as security.
In some circumstances it is better to draw the deposit and costs from the current loan and buy the new place with a stand alone loan – perhaps with another lender. try to keep both loans under 80% to save on LMI if possiblt.
Cheers,
Simon Macks
Mortgage Broker
[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.