Hi all…great website, very useful and informative. My Brother Father and I bought a 5 acre special rural property in Margaret River in 1997 for $189,000. We have just had it valued at $650,000. Our problem is that we have no debt servicability, but want to borrow against the equity. We are considering setting up a share portfolio, say $200,000, to increase our diversity and market exposure. Alternativley, the zoning of the property allows us to build 4 chalets/grouped dwellings. We are also considering selling, but CGT makes that unfeasable. My question is…how can we access the equity with no servicability, and if we can access it…should we buy shares, more IPs or build the chalets?
Any thoughts would be greatly appreciated.
Keep up the good work
Jim
“Our problem is that we have no debt servicability, but want to borrow against the equity.”
You have no income at all?
At this point I don’t know of any other means of accessing equity other than redrawing or refinancing against the property – both of which requires a loan…
Unless you can find shares that will pay regular dividends that will cover your loan repayments – AND can convince a bank that this is going to happen…I am out of ideas sorry…Hi Jim
Firsly welcome to the forum and I am immediately very jealous of you living in the wine capital of the world.
You mention that debt serviceability is a problem but then you are looking at purchasing an income producing asset in a share portfolio.
The portfolio will I assume be a mix of shares which are likely to offer a dividend and the added option to increase income by looking at options.
Given this you would probably qualify for a NODOC loan where income & asset evidence are not required or alternatively a Lodoc loan where evidence of income is not necessary.
The post code and security maybe an issue with certain lenders.
Cheers Richard
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Thanks 4 your quick responses Richard and Indigo!
We do have SOME income. Brother earns $60k/pa but has just had his second child, hence Mrs out of action 4 a while. He also has PPOR loan of $120k, but has $140k equity in his house. I am disabled, but have equity of $150k block in Augusta, $100k of timber slabs n burls, and 12 unit site in Yarloop 100km from Perth CBD worth about $80k, at least! I basically earn enough 2 live on through trading shares online($10k account) + selling a bit of timber here and there. Dad is recievng unemployment benafits.
So you see, we are asset rich, but income poor!
Does that make it a bit clearer?
And yes Richard…its not a bad part of the world in which 2 reside!Burlboy
My suggestion is talk to a good mortgage broker. With that kind of equity, you should be able to access it through a NODOC loan and even, if you weren’t borrowing all the equity, capitalise the interest.
A good broker should be able to set up a Line of Credit that would allow you to do this.
Hope this helps.
Megan
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Your Investing, Structuring and Developing Information Hub.Q for the brokers here..
Cant you also use some of the equity you draw out to fund the repayments for a period as well as dividends or investment income..meanwhile the CG is still growing on the property and the new investment?
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorYou can use your equity as you like.
It might not be the best strategy to use in a market that doesn’t seem to be heading upwards atm.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Burlboy, as Megan and the others have alluded to, equity can be redrawn and made availanle via a line of credit or fully-advanced term loan.
Unlike the rest of the country, our WA market still appears to be very strong even in the rural and south-west area. We just settled on an IP in Busselton 2 months ago and still amazed at the interest in the region.
Regardless of the performance of the r/e market, it’s what you then do with that equity in the form of the stock market that will determine it’s overall performance. Also, as your accountant will better advise, if set up properly, you can offset your borrowing costs against any CG or profit(s) earned on your new investment.
Hope this helps.
Regards,
RobRob Whyte
Certified Mortgage Consultant MIAAPrincipal & Licensee
The Mortgage Gallery
e [email protected]Winner 2004 National Office of the Year!
Accredited with over 27 lenders nationally. 15 years experience in commercial and residential lending, ask me anything, if I dont know, I’ll find out!
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