I am looking to purchase an IP but basically have no deposit but am happy to get a loan 100% if I can just to get started….just not sure how hard this is still?
At the momment have PPOR worth about $400k with $378k owing ….$20k in cash (prefer to leave this in offset for emergency) leaving $0 deposit for possible IP looking about $400k or less ….servicing is not the problem but how hard will it be to get a loan for this IP? should I speak to a mortgage broker for options? Essentially I'll just be paying mortagage insurance for having no deposit? Equity in the house can be used or not enuff? Thanks
How will you pay the stamp duty when you buy this property ?
usually 80% lvr for equity loan so 400k * 80% = 320 k so you could borrow zero as you don't have enough equity.uforia
Given the size of the current loan probably better to start again as the LMI on a total lvr that high over 500K will not be cheap.
Maybe not what you want to hear but probably need to pay down the PPOR loan with the 20K and then take out a new loan of
20k to use to cover the acquisition costs etc. This way the funds borrowed become a deductible expense.Whilst 100% loans are still just with us as duckster mentioned you will need funds to cover the stamp duty, LMI and other Government expenses i.e searches and registration costs.
Richard Taylor | Australia's leading private lender
Just to clarify….$400k loan with $375k owing….house how worth $430k ($30k equity)
Want to get a 2nd loan $400k for IP.
What is the best way to go about this for tax etc? Do I refinance my home loan to get the equity out as deposit for 2nd loan? but this would need to be a separate loan to claim it on tax?
You will not get 100% IP loan as you do not have 20% equity in your PPOR so will be limited to 95% plus LMI.
If the new property is $400K then 5% will be $20,000 deposit plus acquisition costs.
Depending on the State you are buying in this could be another $20K.
If you look at raising some deposit out of the PPOR you will be additional LMI but if you can convince your existing lender that the house is worth $430000 then it still maybe worth it.
Take the funds raised and look at a separate lender for the new IP.
Richard Taylor | Australia's leading private lender
Thanks, given loan was $400k now $375k and the house is potentially worth $440k now…is that equity of $65k? Or do banks generally value your house on the low side thus reducing this? Should I be trying to max out my equity for the 2nd loan to reduce LMI?
If the property is valued at $440K you will be lucky to get 90% of that meaning $396,000 less your existing debt of $375,000.
Of course if the lender deducts LMI from this figure it will be less.
Richard Taylor | Australia's leading private lender
thank you QLDs007!
I have a similar question.
i bought a property for 415k, now i owe 358K. I currently re-pay 2000 dollar per fortnight. this property is PPOR.
I'm not 100% happy with this property as my long term PPOR, because it's far from where I work. it's 20K from Melbourne city.
So in a few years time, I will either sell it or use it as an investment property.(the later will be more likely)Later this year (Probably sept or Oct 09), I plan to buy an investment property closer to the city. I have 25K savings in my offset account and need to build more cash to pay for every cost in acquiring an investment property. I want to structure my current loan and the coming investment property loan better. How should I do it?
Hi Lucy
Not an easy answer on a forum but here goes.
I would be switching the current loan to an interest only loan with 100% offset and put everything into this account.
If when you come to purchase the new IP later in the year get the current property revalued and set up a LOC against the available equity.
Draw this down to proivde a deposit / acquisition costs and retain the cash in the offset account.
This way the interest is tax deductible yet you still have flexibility with the loan.These funds can always be used once you find a new PPOR but in the meantime keep them liquid.
Richard Taylor | Australia's leading private lender
Duplicated post
Richard Taylor | Australia's leading private lender
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