Hello Everyone,
Have just been to Masterclass in Brisbane and keen to get started. I have a basic question and would greatly appreciate a response.
I have approx $100k equity in my home. Can I use this as a deposit towards an IP ( and not increase my interest bill ) or do I have to borrow cash against it ( eg extend mortage or get line of credit ) and then use that? Many thanks and best wishes
Markus
You have to borrow the cash and use that.
By the way, what is the property value. People mistakenly think that the value of their home less the amount owing on a loan is what they have as available equity. This is not the case.
Robert Bou-Hamdan
Mortgage AdviserHi Markus & wellcome to the forum,
Yes your loan repayments will increase if you increase your current loan,
A split loan with an offset attached to your PPR loan may be more beneficial than a LOC, Talk to a Mortgage Broker who understands how to structure finance for property investors. Cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Thank you for clearing that up. Will help me in my planning. For info house is worth $270 – $300k. Loan is $130k. You can only borrow max of 80% of equity I believe so I may even have more than $100k.
I work in building industry. My plan is to buy one house, do a cosmetic reno and either rent out to keep or if market is ok sell. Is a line of credit most suitable or are there better products these days? Appreciate your help
Markus
Thank you very much. Will sit down with mortgage broker and discuss best way to move forward.
Markus
I prefer loans with offset accounts as opposed to a LOC. It provides a lot more flexibility and is usually cheaper to obtain and maintain.
Robert Bou-Hamdan
Mortgage AdviserMarkus,
You can borrow above 80% but mortgage insurance will apply over 80% LVR,
A LOC may not be the best option for you as you have non-deductible debt (PPR loan)
As I mentioned before You may want to consider a split loan with an offset linked to the non deductible debt, the PPR split with P&I repayments & I.Only repayments on the Investment split,
The funds from the investment portion of the split loan can be parked in the offset until required for deposits etc. Cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
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