Home equity for share investment loan.

Hi

I am new to investing and am currently weighing up some different investment options. My first option, and the option that looks the most attractive after tax considerations atm is to use my property equity to borrow 100k interest only to invest in blue-chip shares with good divi returns. Can anyone please point me in the right direction regarding who to approach for such a loan, do I need to re-finance my mortgage or can i just approach another lender that will value my property and asses my lending ability etc.

cheers. Matt

You could approach your current lender or use a broker to approach them or another bank

Terryw
Finance Broker
Solicitor

Terry is correct as usual.

Might find some lenders get a little nervous these days and ask for Stat Dec or a letter from your Financial Planner advising you are aware of the risks.

Your Broker should be able to guide you through the easiest path.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

Hi,

I recently did the very thing you're speaking of - I found it difficult to get another bank to loan me the money without refinancing my entire loan.  I am happy with my current lender, so I ended up getting a LOC for my sharetrading with them.

It seems that the banks are a little skittish about giving out a second mortgage.

Just about to do the same thing.
I went through my planner and had everything prepared in reference to fund etc etc.

Basically I have alot of documents to sign and pay him a fee to set it all up.
I just need to produce the Cq and I,m done.

Lending really isnt a big deal as I have a fair bit  of equity
cheers J

Jssmith

Sorry can i ask why you had to pay him a fee as he would have received a commission from placing the lender for you  ?

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

I approached my bank with whom my mortgage is with to do exactly this. My mortgage was paid-up so the balance was $0.00. My banker took the $400 000 mortgage and split it in two (at no cost to me) as follows:
$100 000 for share investing
$300 000 for any other investing I may require
This makes it a lot easier when doing your tax at the end of the year as you can claim all interest incurred costs but need to prove it is interest from the shares and not other arb purchase like a vehicle for example. So all interest incurred on the $100 000 loan gets claimed against my share investing tax.
The interest rate for the $100 000 share investing was not increased by the bank and I pay the same as if it was for the house mortgage.

Richard or Terry might be able to comment on the pros and cons of split loans, as opposed to separate LOCs better than me. What was your  goal/investment strategy when asking about the loan?

Cheers
Paul

If it were me I would get the $100,000 equity loan and use it to invest in a cheap positive cash flow property. The property would completely pay for the mortgage repayments AND you would get all the growth of the property as well.

Also as time goes on the rents will go up but the mortgage expenses will stay the same. Meaning you will be able to make passive income from this investment. To me this seems like a lot less risk than plonking your money in blue chip stocks.

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click Away