Can anyone help me with advice on how to finance the following?
I have an IP with $100K equity and $60K cash in the bank.
I am about to buy a PPOR for $370K but market value of this property is over $450K with the view to spend about $100K to rennovate. Similar renovated properties in this area are selling for upwards of $650K. I am hoping to then use equity after rennovation to fund further IP's.
The bank who financed the IP tell me I can use the equity in the IP to avoid LMI on the PPOR.
I want to be able to finance the rennovation on the PPOR somehow in the mortage on this property.
Is it possible to borrow at valuation rather than purchase price on the PPOR or will the banks lend based on anticipated value after capital improvements? or do I need separate finance for the rennovation?
Will using equity in the IP (either to avoid LMI or to fund rennovation) affect my income tax?
I guess I am trying to work out do I have enough money with my equity and cash to fund this and what would be the best structure?
Any advice greatly appreciated? I am located in Melbourne, so if anyone can recommend a good advisor or mortgage broker, that would be helpful too.
thanks!
I suppose part of that would depend if you organised a fixed price contract for the developement, then the lender if they handle this type of loan may agree to lend on end value. I would be a little careful re using cash from the investment property to fund your PPR I guess they are cross colateralising the properties to do this..
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