Hi All,
Another newbie here, greatly enjoying the shared knowledge & experience on these forums.
My question relates to using the equity in my PPOR. It’s currently worth 350k & I owe $140k, so I was looking to get a LOC set up to use as a deposit etc on a first IP. Problem is my mortgage is with my work credit union & they don’t offer an LOC product. I tried my regular bank that I have my transaction accounts with & they say they would only give me a LOC if I refinanced my mortgage with them as well.
The advantage of the credit union is a really low interest rate (currently 5.79%) with no monthly fees (or exit fee if I did refinance elsewhere). The bank is offering a package with reduced interest rate to start (6.06%) with offset account, fees waived etc.
I’m seeing an accountant with property experience shortly to also help crunch the numbers, & have a family referral to a mortgage broker to follow up. Any other recommendations of good mortgage brokers in Melbourne welcome.
Would appreciate any information/advice, especially this issue of getting an LOC from an institution other than the one your PPOR is with.
Thanks!
Does your credit union offer a loan with redraw? (ideally free redraw).
If so set up another loan with them and take the money and run – or put it back into the loan and redraw it when you need to = LOC without a chequebook
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
Hi Terryw,
My current loan does have free redraw, but I’m only 20k ahead on my repayments (this was my second PPOR & I had a good lot of equity when I started this loan). I’m hoping to access the 100k plus in equity.
I’m not sure I’ve grasped what your suggesting.
Cheers, Gary
No don't use redraw on the existing loan. Set up a completely new IO loan get the money and then pay it back down to $1 and it will be available for redraw.
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
Thanks Terryw, got it now. I won’t pay interest on a $1 balance but will have immediate access to funds when needed.
Have been reading more forums on here & wondering if I’d be better off exiting the credit union altogether due to lack of flexibility. If I refinance with my bank & use the offset etc the interest rate differential will be less important. I know I need to avoid cross-collaterisation, so I could refinance with the bank for the $140k plus extra as a LOC, then use another bank for an IP. Am I on the right track?
Gary
Gary you are getting closer.
Might be a family friend this mortgage broker of yours but why not drop Terry a line.
He is in NSW but would cover Melbourne.
Remember this day and age most deals can be done by email / interest / phone or fax.
Most applications are lodged electonically when it comes to assessment.Might as well go with someone who has excellent experience in dealing with investors and investment structures.
Richard Taylor | Australia's leading private lender
Good point Richard,
My mortgage broker is in qld, we have never met, but she, like yourself, has an excellent understanding of effective investing strategies. My previous broker came to my house and was very nice but had no idea about setting up effective investing finance structures. Everyhing is now done via email and mail, I have my solicitors here in town and thats all that i really need.
cheers
Sonya
Sonya,
How do you compensate the broker for their time, effort and advice?
Do you put all finance applications through them, or do you deal directly with a bank/financier?
Thanks everyone for the very helpful comments.
The mortgage broker isn’t a family friend, just someone that a family member uses & is happy with, so no personal connection. I’d be just as happy to use Terry or Richard, having read many of your sensible comments on here.
Sonya, agree that service doesn’t need to be face-to-face, my first PPOR mortgage was all done online/telephone & it was easy.
I’m hoping to see an accountant (also a referral & does property) in the next couple of weeks (he’s on holidays until next week). Does it matter who I talk to first – accountant or mortgage broker?
Gary
Not all my comments are sensible gary lol.
Richard Taylor | Australia's leading private lender
Hi YI,
The nortgage broker is paid via commission from the lender. All bank loans, as I understand it, build in a commission payment to their loan rates, whether a broker is used or not. So I don't pay anymore for her help. I have looked at going to banks myself as well as looking at home loan rates on websites such as Cannex, and she has secured the best rate that I have seen including factoring in any ongoing fees and charges.
cheers
Sonya
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