Hi,
I’m looking to start investing in property and would like a little guidance. I’ve got the figures for how much I can borrow etc… But unsure which path to take. My mortgage broker says I can borrow $280k without LMI or around $400k plus $30k for LMI and fees with the loan being 100%. That’s based on my wage of $110k, home loan of $245k and our house valued by the bank at $385k.
I would like to buy a unit inner city somewhere like Coburg (Victoria) for $360-390k and hope for Capitol growth and continue to buy or every couple of years or so, but based on the numbers I’m not sure if I could. My other thought/option was to buy somewhere further out like Melton or even Bendigo or Ballarat and aim for a cheaper house to pay principle and interest on the loan so it will be paid off into 20 years. Also look to buy one every couples of years.
Any thoughts would be appreciated.
Hi brmiau,
Oooh – watch out for this bit :-My mortgage broker says I can borrow $280k without LMI or around $400k plus $30k for LMI and fees with the loan being 100%.
Your MB might be looking to cross-securitise your IP with your PPOR. DON’T go that way. Ask them how many separate mortgages are they looking to set up? If the answer is one, RUN !!
Others can flesh this out more than I, so watch out for their replies,
Benny
Hi brmiau,
Be very careful and ask important questions before proceeding. First question would be the one highlighted by Benny, ask if your MB is planning to cross-securitise your loans.
You could potentially unlock $63,000 of equity from your own house which will be set up as a separate loan split from your home loan.
And then apply for another loan for your investment property. By doing it this way, you will not cross collaterise your house with your IP and then get max tax benefits due to the splits. Your accountant can work on your returns efficiently too with this as they are all separated.Regarding your plan on paying off your IP in 20 years, this is really not a good option for you as you will be reducing your tax deductible debt. Alternatively, you can set up an offset account and direct all income to that offset account which is linked to your home loan as this debt is non tax deductible. Parking it in an offset account will also give you access to this funds quickly for succeeding investment property purchase.
Cheers!
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
Hi brmiau,
Be very careful and ask important questions before proceeding. First question would be the one highlighted by Benny, ask if your MB is planning to cross-securitise your loans.
You could potentially unlock $63,000 of equity from your own house which will be set up as a separate loan split from your home loan.
And then apply for another loan for your investment property. By doing it this way, you will not cross collaterise your house with your IP and then get max tax benefits due to the splits. Your accountant can work on your returns efficiently too with this as they are all separated.Regarding your plan on paying off your IP in 20 years, this is really not a good option for you as you will be reducing your tax deductible debt. Alternatively, you can set up an offset account and direct all income to that offset account which is linked to your home loan as this debt is non tax deductible. Parking it in an offset account will also give you access to this funds quickly for succeeding investment property purchase.
Cheers!
I did think it was weird initially that he said I could borrow $280k without LMI but then borrowing 100% of the loan I could get around the $400k mark. What’s the downfall with cross-securitising the loans?
Is there any Mortgage brokers that have experience in investing in property themselves that could help out in more depth? The mortgage broker I met with hasn’t got any IPs himself. I’m really keen on a property in Coburg and auction is in a couple of weeks. If someone is interested I would use them as a mortgage broker
Thanks
Hi Brm,
There are a number of MB’s on here – I’m sure some of them will stop by to help you out. Meantime, do read this to help with some of your questions (some you may not know you have…)https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/
Chase down the links in each post to read about that subject – you’ll see what I mean,
Benny
Hey brmiau,
Cross Collaterising is basically giving more of your asset to the bank as security than what they deserve. You are giving them control over all the assets that is X-coll with them. If you want I can forward you an article written by my fellow mortgage broker about x-coll. It will tell you what you need to know regarding this method. Just shoot me an email and I will forward it to you.
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
Hey brm
So this is where you found me :-)
Looking forward to helping you with all this.
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]
Brm,
You are in very good hands with Jamie.
Cheers!
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
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