Hi All,
I about to apply the Line of Credit Loan(Portfolio Loan) against on my home equity with NAB(as my house security is with them). then I plan to apply a new investment home loan application with BANK SA and use the money in my line of credit loan to deposit to buy another investment home loan with Bank SA.
Is anyone have try this structure? is this a good way to do it? Thanks for sharing.
What rate did NAB quote you on the Line of Credit.
Must admit i think you could do better than Bank SA although i am not the biggest fan of the Dragon at the moment
Richard Taylor | Australia's leading private lender
Hi,
their interest about 6.31% for line of credit.
Hi Cathy,
A lot of investors do structure their loans similar to what you are proposing. A good thing with doing it that way is that do you do not have to cross-securitise your properties!
I won't comment about the choice of Bank's as I may be a little biased in that respect… Haha!
Feel free to PM me if you have any specific queries – more than happy to help out where I can!
Kind Regards,
Matt.
Hi Matt,
Is just between me and you…don't worry…hehehe. But I have no choice as NAB holding my security, it easier I apply Line of Credit with NAB as they hold my house security, if I apply line of credit to a different bank they likely denied my application as they dont like to share a house security with other bank( I have been told this by Bank SA Loan Lender)……When I put in application I have to make sure at least I have 95% of getting it otherwise I'm not putting it in, therefore when they told me that I'm a bit scare too.
Hi Cathy,
You are spot on – most Banks do not like taking second mortgages and you are much more likely to get your Line of Credit approved with your existing lender! When purchasing your new property though you can choose whoever you like because they will only be taking the new investment property as security!
I hope it all works out for you Cathy!
Kind Regards,
Matt.
That is exactly what I though. Thanks for all the sharing. Will keep your details in case I need your help in the future. Thank you
No worries at all Cathy – more than happy to help out any time! I'm also happy to run some figures through a calculator to see if your application would service to give you more confidence to apply for the new loan for you if you want. Just let me know.
Good luck with it all!
Kind Regards,
Matt.
Hi Matt,
That would be great…can you help me? Nab just valuation my house last month, if I ask for new Line of Credit loan do they need to value my house again? or you think they just use the last valuation figure? Thanks
Hi Cath
With the NAB usually if the valuation is within the last 3 months they will work off the last figure unless you can convince them the property has increased in value and can provide evidence so support this.
Richard Taylor | Australia's leading private lender
Hi Cath,
I believe they would use the most recent valuation as Richard has said. At the CBA we generally use any valuation that has been completed in the past 6 months unless there is a particular reason to order a fresh one (renovations completed etc).
Cheers,
Matt.
Thanks for this thread, it has some good info.
Can I ask how a LOC would work if the situation is this:
– My parents own our PPoR under their name and the bank loan is also under their name
– We have been working together to pay off our PPoR (there is only a small percentage that is unpaid at this stage)
– Now I wish to use some of the equity in our PPoR and obtain a LOC with my bank, the CBA (which is different from their loan bank)How would this work? I spoke briefly with a loan manager but at the time and she said it would be fine but I was not really clear on LOCs – well I'm not much better at this stage. I am mainly concerned about security as obviously I don't want to risk our PPoR that we have worked so hard to pay for.
Hi Zan
To safe guard the deal why not take out the LOC secured against your PPOR with the Commonwealth for 20% of the investment property purchase and acqusition costs and then look to take out the investment with an alternative lender.
When the property value on the IP increases increase the loan and payout the LOC with the CBA.
This way your IP lender will have no interest in your PPOR.
Richard Taylor | Australia's leading private lender
Absolutely awesome tip Richard – much appreciated. Never thought of doing it that way.
See not just a pretty face.
(If you are a current client please do not respond to this comment as you run the risk of having your loan declined lol)
Richard Taylor | Australia's leading private lender
Good Advices thanks..
Hi Richard,
Just on this topic again (you must be quite sick of it!)
My husband and I have a situation where, we have a PPOR and IP, both with stand alone loans through different lenders and have very low debt. We are looking at opening a LOC to fund the deposit for another IP. The question I have is, which security should be used for the LOC? Ideally it should be the IP, except I am not fond of that lender as they have high fees. We would like the next IP loan to be with the same lender as PPOR, however, I am uncertain whether it is a risk, having the PPOR, LOC and 2nd IP all with the same lender, isn't this similar to cross collateralisation, even though it technically isn't? Sorry hope this is making sense.
Thanks
Why not look at refinancing your IP and switching to a lender with no fees or charges and taking the LOC out on here.
Last thing you want to do if you can help it is take out the loan on your PPOR.
Just most people starting out dont have a choice and to buy their first IP use the equity in the IP.
There are some good investor loans out there at the moment with no application fees etc.
Come with fairly basic features but you dont need that on an IP especially when you have an existing non deductible PPOR.Richard Taylor | Australia's leading private lender
xanh wrote:Hi Richard,Just on this topic again (you must be quite sick of it!)
My husband and I have a situation where, we have a PPOR and IP, both with stand alone loans through different lenders and have very low debt. We are looking at opening a LOC to fund the deposit for another IP. The question I have is, which security should be used for the LOC? Ideally it should be the IP, except I am not fond of that lender as they have high fees. We would like the next IP loan to be with the same lender as PPOR, however, I am uncertain whether it is a risk, having the PPOR, LOC and 2nd IP all with the same lender, isn't this similar to cross collateralisation, even though it technically isn't? Sorry hope this is making sense.
Thanks
It doesn't matter which lender you use. Tax deductibility depends on the purpose of the loan not the security. From an asset protection POV it also don't matter, if the houses have the same owner, as they will be both at risk if you were to default.
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 for the responses. We just want to get the structure right from the start and avoid any messy complications later.
Where can I find the most competitive investment loans? We have been looking for a financial adviser/broker who specialises in property within Melbourne but haven't found any as yet.
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