All Topics / Help Needed! / revaluation and drawing funds for next loan

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of Gilly61Gilly61
    Member
    @gilly61
    Join Date: 2013
    Post Count: 8

    Hi,

    We currently have three properties;

    1. Our PPoR (valued at $250,000 – load paid off),
    2. Property 2 bought for $185,000, renovation cost of $30,000, revalued at $280,000
    3. Property 3 bought for $175,000, renovation cost of $55,000, revalued at $350,000

    Total loan is $444,000

    Property 2 is rented out on a short term basis grossing $20,000 per annum. We have just finished renovating property 3 and anticipate doing a similar thing.

    My husband and I are self employed (which the banks seem to hate!)

    I assumed that with $880,000 worth of property and $440,000 loan that we would have no problem in drawing out some of the profit to refinance our next property.

    Excluding our PPoR – the value would be 630,000.

    However, my finance broker said to purchase another property – the maximum scenario would be – we would have to put up another $30,000 cash to borrow $160,000. So we could only purchase a property for $190,000.

    Does this sound right to you? Am I being too hasty in assuming I can purchase another property for a greater amount (or with no cash deposit) using the increased equity in our property?

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    We don't have any financial details (nor should you put it up) so it is impossible to say.

    Best to get a second opinion from another broker. There are many ways to structure an application in order maximise an investor's serviceability (particularly one thats self employed).

    Also lenders dont hate self employed – they just require more information. I just had a loan formally approved in 2 days with a second tier lender for a client that was self employed overseas!

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of WhatIfWeFinanceWhatIfWeFinance
    Participant
    @whatifwefinance
    Join Date: 2009
    Post Count: 58

    Without knowing your income details it's hard to determine whether the broker is giving you the best deal. 

    Self employed lending means you need to approach a lender that is more sympathetic to your needs and that is the value that a broker should bring.  Provided you have the right information it should be relatjvely straight forward to determine your borrowing capacity and determine the most appropriate lender.  

    Profile photo of Tony FlemingTony Fleming
    Participant
    @the-dark-knight
    Join Date: 2008
    Post Count: 396

    As the above posters have stated probably be best to get another opinion. It might cause some problems at tax time though with using equity from your PPOR for an investment. From memory yoú/your accountant would have to sit down and go over the interest for the investment deductions but it's a good way of expanding your portfolio :)

    Tony Fleming | Triumphant Property Group
    http://www.triumphantpropertygroup.com.au
    Email Me

    NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    The Dark Knight wrote:
    As the above posters have stated probably be best to get another opinion. It might cause some problems at tax time though with using equity from your PPOR for an investment. From memory yoú/your accountant would have to sit down and go over the interest for the investment deductions but it's a good way of expanding your portfolio :)

    Depends how it is set up. Separate loan = dream. One big loan = nightmare!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Gilly61Gilly61
    Member
    @gilly61
    Join Date: 2013
    Post Count: 8

    Many thanks for your comments. I will seek further advice. Quick question though… Cant you use the equity in the two investment properties as a deposit for the third so you dont have to front up more cash for the deposit?

    Thanks for your replies

    Cheers

    Gilly

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Absolutely subject to the amount equity available in each property. Just make sure that the loans are standalone and the purposes are not contaminated. 

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

Viewing 7 posts - 1 through 7 (of 7 total)

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