Hello
I need some help. Current situation – hubby & I have line of credit for $1,136,000 (PPOR $631 & IP1$505) drawn Down PPOR $610k & IP$502k. Value of PPOR $1,050,000 based on sales of similar properties in surrOunding area. IP $490k. We have Another IP2 unencumbered value $460k..IP1 was bought with 100percent plus mortgage and is company title. We want to increase LOC by $90k to pay for some renovations and debt consolidation of credit cards. Spent more than 2 weeks Irving documentation to bank – pay slips, proof of rental income etc – only to be told the increase would put LVR over 80 percent so we would need to mortgage IP2. I believe bank valuation of PPOR @ $950k is too low and that is what has just put us over 80 pc. I then rang a mortgage broker who said they couldn't help due to IP1 being company title. Another mortgage broker has suggested swapping mortgage from IP1 to IP2 and then they can help because IP2 is strata title but We don't know if this is good idea or not. IP1 is in a blue chip area and is giving excellent rental returns. We have been with current bank for more than 20 years and up to now they have been good but we want to get rid of CC and finalize Reno which will increase value of PPOR. However don't think we should mortgage IP2 for relatively minor increase. Not sure about swapping mortgages as advised by broker either. Any ideas PLEASE!
From your post I assume the PPOR and IP1 are cross collateralized, and the lender won't take above 80% due to the company title of the IP1.
Why don't you then refinance into 2 separate loans, one loan on 80% of the IP ($490K x 80% = 392K), the other on the PPOR of $810K ($610K existing PPOR + outstanding IP of $110K + $90K increase). It leaves an LVR of just over 85% which would mean LMI involved but at least it should be able to be done without involving IP2 in any way.
Hi,
You are saying that the current balance of your PPOR is $610k and you want to increase this by $90k and that your PPOR has been valued at $950 by the bank – is this correct? You should still fall under 80% unless you are looking to increase your limit of $631k by another $90k.
If its cross securitised then this is not good and your first step should be to look at unlinking. You need to re-structure your loan set up. Also why do you have all your loans as a LOC?
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