On the way to buy my 2nd IP – questions on refinancing

Hello Rockney,

The increase of $24K can be set up in a separate split to the first loan. If you select the right loan structure you can avoid making repayments on the additional amount until you settle on the new property. 

When refinancing you have to look out for exit costs with your existing lender, which will vary depending on how long you have had the loan. You can find these out by giving your bank a call and they will vary from between a few hundred $ to a couple of thousand. There will also be other costs involved with setting up the loan with the new lender. I always advise my clients they should not refinance to another lender unless they have a good reason to do so such as being able to obtain significant savings in repayments (enough to more than cancel out the costs and efforts of refinancing), they can obtain a better loan structure, they hate their current lender etc.
Your question regarding is lending to an 80% LVR being too aggressive depends on your circumstances and your personality. The higher leverage you have in place the greater the potential returns and potential losses. Most people I work with are very comfortable lending to an 80% LVR but I have some clients who would happily borrow to 100% if they could. If you are unsure about where your comfort level is you are welcome to get in contact with me and I will be happy to send you a questionnaire that will provide you with a bit more clarity.
In regards to your final question, you can never have too much buffer in place but how much you need will depend on your cash-flow after taking into consideration your employment income, rental income and your outgoings. If you have enough surplus to cover a loss of tenant for a length of time, loss of employment or a series of unexpected expenses then you can get away with a relatively small buffer. If you are not in a position to cover the situations then a larger buffer would be advisable.

Yep, the rate should be the same.

There's probably no need to refinance with another lender. Just need to set-up the second loan split with ANZ as indicated above.

Whether you go to 80% LVR or higher comes down to your own individual risk profile. If you're reasonably risk adverse and would prefer to have a buffer then going to 80% isn't a bad idea. If you want to be more aggressive and accumulate more in a shorter timeframe, then you could consider refinancing up to 90% LVR – you'll have to pay some LMI (you can do a search on the pros/cons of paying LMI – I personally don't have a prob with paying it, especially in the early stages where equity isn't that plentiful).

In any case, a decent broker with investment knowledge will structure it correctly for you.

Cheers

Jamie