Future loan requests get approval?

Hi everyone,

I have one concern which I don't think got a clear answer to probably because it relies on too many uncertainties in the future eg interest rates going higher etc.  I'm considering the idea of purchasing two investment properties of my own before going joint on my 3rd property provided things go well of course

I do understand that it isn't that simple to get a home loan, let alone get two loans in a possible time frame of 1.5 years. From what I understand, even if equity does increase from the first property the bank would still need to see if I can service the next loan as well as the first which I understand is based on income, rental income, current debts etc.

Now this is what I really want to know, given the below scenario, would it be possible to purchase two investment properties?  I am basing on the fact that things do go well for the first home within the following year and that equity and rental returns will improve in say a years time.  I do realise that I am taking a big risk buying in a resource mining area and therefore I would not proceed with further action if the first property does not take off. The second property will also be in the same area. Both properties I would plan to sell after a few years of holding.

If a lender saw the below scenario would it be likely to approve or reject the application for a second loan considering the increase in equity from the first and if so, are there actions I can take from the beginning to avoid this? More specifically, what can I do to maximise my borrowing power from the start?  eg using different loan structure? increasing rental income? waiting until I have much more equity from IP#1? etc.

Please let me know if anything is unclear.

June 2010
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My financial position:
– Salary 51k pa

Investment property #1:

– Purchase price 320k
– LVR 90%
– Equity
– Steady rental income
– Negative geared property
– Interest-only loan for 2 years (100% offset account)

May 2011
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My financial position:
– Salary 53k pa

Investment property #1:
– Purchase house 320k
– LVR 90%
– Equity has increased by 15% (around $50k)
– Steady rental income
– Neutral/Positive geared property
– Interest-only loan for 2 years (100% offset account)

**Based on the new position of IP#1, can I purchase IP #2 given the details about the second property?

Investment property #2:

– Purchase house 368k, since I'm estimating median house prices rise 15%
– LVR 90%
– Equity (Deposit paid by Equity access loan from IP#1)
– LMI fees and cost covered by part savings and equity access loan IP#1
– Steady rental income
– Negative/Neutral geared property
– Interest-only loan for 2 years (100% offset account)

Thank you kindly for you advice.