Hi There
I am new to the idea of property investing and I am looking for some finance pointers. My husband and I have a home with some equity in it. We are looking at purchasing an investment property and wish to use the equity in our home as we don’t have much saved for a deposit. How does it work? Does our original home loan go up by the amount we borrow against the home? What if we then later sell our home, do we then owe that equity that we borrowed against to the bank? Any pointers would be much appreciated.
Kir
Hi Kir, your own home loan does not go up, you can borrow the full amount for the investment property but it will be secured against your own home since that is where you have your equity. Have a talk to a mortgage broker in your area, it will not cost you anything and they can explain how it all works. Cheers.
So my home loan does not go up which is good news. But you say it is secured against the equity. Does this mean that if we sell we will then owe the bank that secured amount. Eg. If we buy for $100,000 and need to use $20,000 of our equity for a deposit, do we then owe the bank that $20,000 if we sell our home?
Kir
A better idea might be to raise your current home loan by enough for a 20% deposit and purchase costs. Have them show this as a split so you can track the two amounts and pay them seperately.
Then aply for a fresh loan for the new place with a 20% deposit. This will avoid LMI and cross collaterisation.
Any broker worth his salt can achieve this for you. I would recommend you consider a professional package with any of the major lenders or the IFHL product.
All the best,
Simon Macks
Interest Free Home Loan Agent
[email protected]
0425 228 985Please email me rather than using the PM service here.
Fully Accredited With Derivex LTD and IFHL PTY LTD
***Ask about our Interest Free Home Loan***
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hopefully by the time you sell your house, the new property will have gone up enough for you to ‘repay’ the 20% securred against to be paid back with money fully securred against the investment property.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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
Thanks for your replies.
I am interested to know more about the “interest free loan”.
Can you please tell me more about this.
Kir
Hi Ker
Interest free homne loan is a very hot topic on the forum, you need to have a look in the finance section of the forum. The discussions are about Derivex who is the company offering the interest free home loans. Simon Mack posted an answer to your question he is an agent for the interest free home loan and I am sure he would be able to help with any questions
Hope this helps
Martine[biggrin]
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