My wife and i are keen to but another investment property. Our PPR is currently valued at 350k by bank and we owe 278k. We also have an investment unit which we are halves in with my wifes sister. Our half is valued at 110k in which we owe 80k.
So we have 100k of equity in our two properties which are both with the same lender. Will we be able to use this combined equity to purchase another property?
278/350 = 79% LVR
You could borrow up over 90%, but LMI will be payable.
Say you buy a $300,000 property, the LVR would be
578/650 = 88%If you included some costs
600/650 = 92%You shouldn't use your investment unit as it wil be messy and this will affect your wife's sister.
Of course, you will still need adequate income to obtain a loan.
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
Ok thanks, my current bank lender will only lend 80% so that's no good for me. So should if i seek out another lender will they loan 90% on my PPR? And will that mean i need to break my current home loan and refinance it with other lender? Our unit loan is now cash positive and we pay $100 a week extra on our home loan so i would be confident we could afford to fund another property in this current market
Andrew
I am suprised that your current lender will only go to 80% LVR but in saying that it is possible.
Yes utilise the equity you have in the current property and gear to 90% and then use this as deposit on a new IP.
Try to avoid using the equity in the property you jointly own with your sister as Terry has mentioned it will get messy.Make sure your Broker sets up the 100% offset linked to your PPOR and have the rents deposited into the offset account to maximise your interest savings.
All sounds good from here on in.
Richard Taylor | Australia's leading private lender
Thanks guys for your help so far. So to clarify things gearing to 90% on my PPR i have 35k – costs, stamp duty etc to use for a deposit on an investment property? And the current loan with my bank can does that remain with them? or will the broker i obtain the loan from refinance that loan and incorporate it with my new loan? That part is the confusing bit for me
Also the unit we have with the sister we both have seperate loans on the unit if that changes your thoughts?
Andrew
Whilst your and your sisters loan are separate you will both be jointly and severally liable for the entire debt.
Personally i would still avoid using the equity in this property for your future IP acqusition.
Assuming the valuation is accurate you would refinance to a new lender (wouldnt have a choice as the new lender would want 1st mortgage) and raise $35,000. Then taking out your acqusition costs you would use the balance as deposit.
This could be with the same lender or a new lender.
Difference being that the loans would not be cross collateralised and not cause you problems down the track.
Mortgage insurance is going to be payable and you probably need to look at someone who will capitalise the premium as the equity is a little tight.
Richard Taylor | Australia's leading private lender
Andrew
Is your loan fixed? Watch any break costs!No it's not fixed
You must be logged in to reply to this topic. If you don't have an account, you can register here.
