Finance advice

Viewing 5 posts - 1 through 5 (of 5 total)

aferns
Participant
@aferns
Join Date: 2010
Post Count: 4
November 22, 2010 - 8:31 pm
Hi to all,
Can someone please advise me on the best way to finance a loan?
Currently own ppor and owe 280k on an investment property returning around 5.8 net with a steady tenant.
I am considering purchasing another investment property worth 240k returning around 6 net but only have around 25k cash (told rental demand is high). I have a steady income and would be able to cover costs with tenants. Do I go with the same bank (7.1) which is convenient and easy to juggle accounts or go with another bank? I am not sure of my best options.
Or for the experienced out there is this too much of a risk and are there greater bargains on the horizon?????
Thanks in advance
Andrew
duckster
Participant
@duckster
Join Date: 2004
Post Count: 1,674
November 23, 2010 - 5:55 am
If you go with the same bank then try not to cross co-lateralize the loans and try not to consolidate investment loans into one loan.
Search this forum for cross or consolidate for more information on why to avoid this.
if you own PPOR you can utilize the equity via a line of credit loan up to 80% of the PPOR loan. Ask the bank about this facility.
Search this forum for line of credit or LOC if you want more information on what it is and how it works.
https://www.propertyinvesting.com/forums/getting-technical/finance/4334601?highlight=cross
The small LOC would allow you to borrow the amount you need for the deposit for the next investment loan while separating the LOC as investment purposes from any private use loans you may have on PPOR.
https://www.propertyinvesting.com/forums/property-investing/help-needed/4334435?highlight=cross
With an LOC you can go to any lender as you have the deposit.
You could use a mortgage broker to access the best option for finance.
https://www.propertyinvesting.com/forums/property-investing/help-needed/4334449?highlight=cross
I can't advise you but have given you information so that you can investigate further and then you can decide which way is the best way to decide to go.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
November 23, 2010 - 11:02 am
Just get a LOC on one of the existing properties and use this as deposit and borrow the rest from another bank. Best to use none of your cash
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
November 23, 2010 - 11:18 am
Terryw wrote:
Just get a LOC on one of the existing properties and use this as deposit and borrow the rest from another bank. Best to use none of your cash
Agree with Terry. I'd also be placing that $25k in an offset attached to your PPOR loan.
How much is your IP worth? Depending on it's current value I'd be inclined to do the top-up on it and leave the PPOR unencumbered.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Paul Dobson
Participant
@pauldobson
Join Date: 2003
Post Count: 1,196
November 23, 2010 - 10:08 pm
Hi Andrew
You might like to consider structuring your next IP so it generates positive cash flow and fixed capital gain, i.e. buy your next property and on sell it with a vendor financed Instalment Contract.
We have been doing this for quite some time and find it to be a good tool to increase the speed of our portfolio building. It is often possible to structure it so that one of these +cf and fixed capital gain properties, supports another similar buy & hold.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
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An alternative way to finance your home.