Hi all,
I was hoping to get some advice. I own a 2 bedroom unit in the Narrabeen worth $600k of which i have 250K financed. Currently the rental return (payed by my son) almost covers the loan repayments.I also own a renovators dream type house in the northern suburbs. worth approx 1.0M of which i have 400K financed.
The plan is to add a second floor as an owner builder with my son and extend my home. I have estimated that the building works will cost 400k. For cashflow reasons I would like to borrow against the house for the first stage of the renovation to 300K and then borrow the other 100K against the unit for the second stage.
My thinking is that if the market turns and i cant get the right price for the house at completion I can then carry the repayments for the house. My son would then pay a little extra in rent to cover cost of 100K untill the house is sold.
My question is
Will the banks allow me to borrow againt my unit which is privately tenanted to renovate my house.
Does this give the protection i think does?
Is there any advantage of doing it this way or should i sell the unit to finance the buildYes you could borrow. Subject to serviceability etc.
Not sure what you mean about 'protection'.
Also the interest on this loan wouldn't be deductible so make sure you have a separate split if you are using the investment property as security
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
Yes as Terry said you can do it. Not a problem as long as you can service the debt.
As long as your handle name doesnt represent your employment status i cant see an issue as long as serviceability is evident.
I am not sure i would do it as an owner builder loan and would suggest subject to equity you merely do it as a "cash out" deal and control the cash flow yourself.
Couple of lenders spring to mind that would allow such a purpose.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Good point Richard. Owner-Builder has the same stench as ‘student accommodation’.
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