Okay this is probably a stupid question to ask but here I go!
We just got word from two other bank we use, that they’re willing to lend us up to $300K for an investment property. We have about $30K equity on our home. Probably $5-7000 in savings, I haven’t done any research ‘lately’ and forgot most of what I read over the years. Should we ‘go for it’? Or are we setting ourselves up for financial hardship? What are the additional cost roughly when refinancing our home loan and getting another loan for an IP? And can we build these additional cost into the amount we are wanting to lend? We are very excited over this news and I don’t want to rush into it, even though I really think we already are. The banks are going to call us back to see what we’ve decided in one week, I don’t wanna brush them off in case the opportunity passes us by and at the same time, I don’t wanna make a big mistake that will cause us to be worse off than where we are now!This is all we can afford toward an IP? Can we afford it? What you’re oppinion?Only you can decide if you can afford it. It would depend on your risk tolerance levels!
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
To help you figure out costs it can be very helpful to use a calculator which will tell you how much you can borrow given your income, the monthly repayments, and other costs such as stamp duty. A mortgage broker can do this for you but I find it most helpful to do it myself first to have a play with the numbers and see what works best without any pressure to make a decision etc: I find the calculator at westpac.com.au (under calculator, home loans) great for this. Westpac appears about as generous as anyone in terms of borrowing capacity: be careful, they may lend you more than you can afford. Do a budget and see how much you can afford.
But most of all, when deciding whether to buy, look at the property and context. Is it a good buy? Does it suit your investment strategy? Are there prospects for growth, improvement or development? If there is profit to be made immediately or medium term you might go for it, but I would not buy an IP just for the sake of it. It really depends where you are. Much of SE Australia is in stagnation or decline, and you might be better saving more deposit (thus reducing borrowing costs such as mortgage insurance), and possibly find yourself in a position to exploit people who need to sell in a hurry at discounted prices later.“If you look long enough into the void the void begins to look back through you.” Nietzsche
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