Hi,
I am a recent first home owner and new to property investment. I own a inner city townhouse worth 1.1mil which is my PPOR. I have 90% equity in this property and no other debts. I am generation Y, single and my current annual salary is 100K.
I am planning on purchasing an IP and was wondering what the best to way to go about it would be? I have read that I should take out a LOC and use this to purchase my IP. How exactly does that work? How do I unlock the equity that I have in my PPOR?
Thanks.
You would get a second loan against property A and then use the cash from this for the 20% deposit and costs of property B and then borrow the remaining 80% from a bank. Banks for each property can be different and the loans won't be cross collateralised.
If you just went into a bank they would recommend you take out one big loan of 105% of the new property and they would want both property A and B as security for this loan. I would advise against this.
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
Yeh I completely agree with Terry. It would be easy to draw out a 20% deposit if you currently have 90% equity and then get a new loan for the new property with a new bank. So if you default they won’t sell your house.
Are you looking to buy positive cashflow property or growth property?
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
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