Hi all,
Can anyone offer any advise on how to structure finance etc on the following scenario.
My partner and I own a house outright, we mortgage this to buy another, both have increase in value a fair bit, we are able to borrow again, another separate home it to be put into our names to (adding to our equity), is there some sort of finance option that we give us a line of credit type of system were we are able to borrow to buy and sell certain amounts several times a year. Say we are given x amount in dollars based on what we currently own to borrow, we use this continually over and over in other investments without setting up new mortgages etc.
Any thoughts much appreciated.
Wow, what a great start to own a house outright.Ok well I would get a loan on this house at 80% LVR(loan to value ratio)Banks are usually happy to do this as interest only(IO) if you get the right deal. So you have say $240k out of a house worth $300k you can use.
The reason you do this interest only is to minimise what you pay into this loan, which maximises what you have available to service the investment loan(s).
Now this is the scary bit for most new investors so take a deep breath first………………………….ok, now with the $240k what you really have is the deposit @ 20% for 10 x $100k homes/units/townhouses with $40k for legals and stampduty.
Got that……..10 homes as investments now. So with this example you have settled on 10 homes all starting at $100k or thereabouts. Given that all property doubles in value every 7-10 years on average world wide for the past 200 years you can usually bank on this happening every 10.
So in 10 years time just by structuring correctly your humble home instead of breaking your backs to pay one off then go again so you maybe if lucky end up with 2 or 3 in 10 years, you have 10 with a 50% LVR and all the banks will love you.
So somewhere in all that you have choices, options, and a loife without stress, just a clear sailing to retirement.
Me on the other hand have pushed and nudged and stretched every minute of every day and have sped the process up a little.
So with 10 houses in 10 years each paid off 50% with no more money down except for maintainance, you can then sell 5 to own 5 and sit back. Option 2 for me says go again and again while you can do it comfortably then when it gets a bit tougher, slow down then.
Disclaimer disclaimer. This is not advice, this is one mans opinion on what to do in your situation, nothing more.
But again, well done or being where you are and having goals. Its a big step above the average already, so keep climbing.
DD[biggrin]
Don’t sweat the small stuff,and it’s all small stuff!!
Hi there,
Thank you so much for taking the time to reply, I want to ad that I am 24 years old and wish to retire yesterday
So nothing is going to shock me, I realise that to do what i want to do, i have to take a big plunge.Question – how on earth do you service 10 loans for 10 years, please clarify how these 10 properties are serviced to make the banks happy, we do not earn much at all. Sorry I am a little slow on the uptake on this.
Many thanks
DenyellDenyell
Hopefully your rents will service most, if not all, of your loan repayments.
I think DD has it down pat. If you are planning on buying and selling, then just using a LOC secured on another property may also be an option as it reduces costs.
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
So nothing is going to shock me, I realise that to do what i want to do, i have to take a big plunge.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
