Using Equity to obtain another property.

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Bluemist
Participant
@bluemist
Join Date: 2005
Post Count: 14
October 28, 2005 - 8:34 am
HI all,
This will be a basic question to you seasoned investors so I hope you can help me.
I own an apartment (no mortgage) and I am wondering whether to
a) sell it
b) keep it as an investment poperty
What I am wanting to know is if I keep this property can I use the equity/value of the property to fund another property (which is more expensive).How does it work? Will the bank just give us the difference between what our apartment is worth and what the new property is worth?
Hope this makes sense.
[biggrin]
Bluemist.
Mobile Mortgage
Member
@mobile-mortgage
Join Date: 2003
Post Count: 913
October 28, 2005 - 8:52 am
Hi Bluemist & welcome to the forum,
You could use the equity available in your current property to fund the deposit and closing costs on the next purchase,
Basically you would have 2 loans, the first loan = 20% and closing costs etc of the new purchase, this would be secured by your current property, and the 2nd loan would be 80% of the contract price of the new purchase, this loan is secured by the new property.
Structured in this manner you will avoid cross colaterisation and the need for Lenders mortgage insurance (LMI) I hope this helps, Cheers.
Regards
Steven
Mortgage Broker
Mobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.au
PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.