All Topics / Help Needed! / Should we use equity for IP?

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  • Profile photo of lisaswallowlisaswallow
    Member
    @lisaswallow
    Join Date: 2004
    Post Count: 1
    March 31, 2004 - 1:13 am

    Hi – new here!

    We have just found out that we have 100k equity in our house & have opted to change to LOC to get access to this. Can we use this towards buying an IP? Nick’s wages won’t cover another loan but do banks take rental returns as ‘income’? I am going to be starting work in about 18 mths so should we leave it till then? Our affordability would be tight otheriwse re: day to day expenses etc? What has anyone else done in this situation? Is it worth the risk if we can get the finance??

    Thanks

    Lisa

    Profile photo of BEAR1964BEAR1964
    Participant
    @bear1964
    Join Date: 2003
    Post Count: 702
    March 31, 2004 - 2:04 am

    My plan is to use my LOC for deposits and then take out loans on the investment properties.

    Regards Bear

    POSITVE CASHFLOW properties and Joint Ventures available!
    For the BEST deals register via E-mail [email protected]
    DONT MISS OUT!!!!!

    Profile photo of RubbachookRubbachook
    Member
    @rubbachook
    Join Date: 2003
    Post Count: 288
    March 31, 2004 - 3:48 am

    Yes, banks consider rental income as income in calculating loan serviceability.

    Profile photo of CeliviaCelivia
    Participant
    @celivia
    Join Date: 2003
    Post Count: 886
    March 31, 2004 - 4:12 am

    Yes rental income is calculated but I thought only about 80% of your rental income.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544
    April 1, 2004 - 1:21 pm

    Hi Lisa,

    I believe the key issue for you is suggested in your comments “so should we leave it till then? Our affordability would be tight otheriwse re: day to day expenses etc? What has anyone else done in this situation? Is it worth the risk if we can get the finance??”

    Sure you will be able to purchase positively geared property but the key issue is whether or not you have sufficient reserves to cover those little things that go wrong with property.

    If you do not have the financial or mental capacity to manage at these times then maybe you are better waiting. There is no rush.

    You have the ideal opportunity to spend the next 18 months learning as much as you an about property – reading books, asking questions, listening to others, researching areas, working out what you can and can’t or will and won’t do so that ultimately when time passes (and it will) you can move quickly and with surety.

    Using an approach like this will mean the time isn’t ‘wasted’

    Derek
    [email protected]

    Read my comments? Think I can help you? PM or email welcome.

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