Help understanding equity - vs Loan borrowing amount

Viewing 6 posts - 1 through 6 (of 6 total)

darkness72
Participant
@darkness72
Join Date: 2013
Post Count: 51
November 26, 2014 - 9:31 pm
Hi
A silly Q,
Example – have equity of 200k
Look to purchase new investment property of 600k total.
Does that mean my Total new loan from bank will only be 400k or 600k
ie: the 200k equity is the safety net ….
And I will only have to make fortnightly repayments based on 400k … yes??
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
November 26, 2014 - 10:40 pm
Hi Darkness
Not a silly question at all.
If you are buying for 600K then your new loan will be for 600K and interest repayments will be based on this figure.
Remember there is a big difference between equity and borrowable equity.
The other thing is if you are looking at buying another property probably a good idea to get the equity loan set in place now in readiness as you would probably look to use a separate lender for the standalone loan.
Structure the loans correctly and you will be fine.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
darkness72
Participant
@darkness72
Join Date: 2013
Post Count: 51
November 27, 2014 - 4:13 pm
Thanks for your response
looks like I will have to do a little more research
I was thinking the same as you but my loans broker explained it as above in my first post, and a work colleague believes their equity / investment loan works the same…….?
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
November 27, 2014 - 10:48 pm
Time to be switching brokers and ignoring comments from work colleagues.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
November 29, 2014 - 12:03 am
How could it be otherwise?
If you are buying a $600k property you have to pay $600k!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
November 29, 2014 - 7:50 am
Hi Darkness
Spend some more time educating yourself and getting clued up. I wouldn’t rush into anything right now until you’ve got a better understanding of what you’re aiming to do.
It sounds like your current broker isn’t working out too – perhaps consider getting a second opinion.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]