Am about to organize my finance soon for my IP #2 but before I do I was doing some calculations to find out how much equity I currently have now.
This is what I came up with so not sure if this is how broker/lender will work it out.
No Cross Collaterisation for IP#1.
No Cross Collaterisation for IP#2.
Ok here we go
PPOR:
PPOR value = $480k
Mortgage = $298k
Yr 2011
IP# 1 has 2 loans:
Investment Split Loan (topup) = 40k (funded using equity from PPOR)
Investment Loan = 270k
Yr 2013
IP#2 to be financed scenario(Equity available to fund IP#2)
To work out the equity available it would be 298k + 40k Split Loan = 338k
Equity Available = 80% * 480 – 338 = $46k
- Is that how it will be calculated?
- I believe they will have to use that 40k from investment property #1 as it was secured against PPOR and add it to what I currently owe on my PPOR to work out how much equity is available?
Is this correct or not?
Yep that's right – $46k if you take the PPOR up to 80% LVR.
Some lenders will allow you to go up to 90% LVR as well – that would give you a bit more to play with if needed.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Your situation is similar to mine new2invest…. I have just purchased #2 and both properties were financed this way. I want to save up to spend some money on PPOR, which should increase it’svalue, so I can do another equity loan against PPOR in 2-3 years time. Our bank accounts now have several loans/accounts but at least there’s no cross collaterisation. Whilst both properties have only just settled over the last 8 months, Jamie I have a question for you…. For #3, would you suggest the same principle or perhaps try to release equity from #1 and 2, (since they are financed with the same lender), rather than a PPOR equity loan?
trickeymickey wrote:Jamie I have a question for you…. For #3, would you suggest the same principle or perhaps try to release equity from #1 and 2, (since they are financed with the same lender), rather than a PPOR equity loan?It depends.
I'd look at accessing equity in whichever property has the lower LVR so as to mitigate any LMI expenses. It also comes down to who the lenders are and what their policies are like.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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