All Topics / Legal & Accounting / COC & IP Loan Cost when using Equity
Hi,
Can someone pls clarify how to correctly calculate the COC and the total IP loan costs when using equity in another mortgaged property.
E.g. 20% deposit and closing costs are funded from equity. This would result in an ‘infinite’ COC as no cash was outlaid. Or do I calculate the loan costs on 80% of the purchase price and use the 20% deposit and closing costs to calculate the COC?
Thank you for yur help.
WTB
You could do it either way. COC is just a measurement used to compare different investment strategies. Infinity is nto real meaningful, so I would calculate it as if using 20% cash deposits. You could be using these deposits elsewhere, so that is what you want to compare.
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
Thank you.
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