Hi Experts!
So.. the day has come, two bank valuations later and consistent figures, I’m in the position to refinance for equity release to purchase additional IPs, however I need to seek some advice on the best way forward. At the moment this is the current outlook;
87.68% LVR to release 200k (or so)
Potential purchase of 4 IPs around the 250-300k mark (positive cash flow)
Current IP is currently tenanted.My worry is that obviously going about the 80% LVR sends red flags to everyone,
and borrowing such a significant amount of debt has to be structured carefully and
have a risk management plan in place. Would you stay under the 80% LVR or boldly push forward
and try and secure the best interest rate possible?All feedback appreciated.
Hi Matt
Not sure why you think red flags would be raised for a lvr over 80%.
Loan would be Principal & interest (IP > 80%) but there are some fairly decent rates around.
As long as you can service then no reason why you wouldn’t go that route.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Matt
Not sure why you think red flags would be raised for a lvr over 80%.Hi Richard,
I was more or less going by Steve’s way of thinking r.e. potentially becoming a credit risk in future by taking out a >80% loan however I’ll most likely go down that route. Thanks for your input.
You could always start at 80% and increase later – but harder to cash out later.
You don’t want to incur LMI unnecessarily. What if it takes you a full 12 months to buy the 4 properties? There could be growth in the meantime, which might have meant less LMI if you had waited.
Also there is a question about the deductibility of LMI when you are incurring too soon compared to the investing.
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
You could always start at 80% and increase later – but harder to cash out later.
Yeah I’m forming the same view the more time that passes, best settle in the one hit, I’m only paying for what I use when the equity gets put towards another loan. In the meantime it will sit dormant, so fingers crossed the application is a success.
Thanks Terry.
Hi Matt
Are you looking to do an equity release for $200k at 87% ?
If so – that’s not an easy deal to get approved!
Banks aren’t overly keen on large cashouts above 80% LVR these days. If you’re going above 80% you’ll most likely need to have evidence of what that $200k is being used for.
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]
Hi Jamie!
I guess this is the issue with the real estate industry, everyone has their own views. Brokers, agents and vendors.
A few things changed since I started this thread, I had a big 4 player turn down my application for the original plan, then a smaller financier wanted to approve with interest only and a higher variable rate.
With all this mixed information I did my due diligence and got different advice. I withdrew the idea of the big equity release and invested in my education and joined a mentoring program.
So now I can make an educated and confident decision for the next 1 or 2 IPs. Best decision I’ve made in a while!
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