New Property Purchase but current house has to be secured… help

[coretexParticipant@coretexJoin Date: 2009Post Count: 25]

September 9, 2009 - 10:49 pm

Hi All,

In a bit of a sticky but good situation i'm thinking about purchasing another investment property soon and i have passed servicability for a new property but i don't have a deposit. My current property has enough equity to get me a 97%LVR loan inc purchase cost of to buy a house for 300K.

Problem is only way i get can my foot into the door is Secure my current house to purchase my next one taking my total LVR to 103%. i don't really want to do this but is the only way unless i get 30-40K deposit….

My other question is both my loans will be on a 97% LVR how long would i have to wait till i can split my loans so my first property is a stand alone do i need to wait for the total LVR to drop from 103% to 97%? Does the bank need to do a valuation on both houses to meet 97% for this to happen? what happens if one house depreciates and the other apreciates?

What makes cross calaterlizing loans so bad? i want to know the worse case senario

Thanks Bill

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

September 10, 2009 - 12:48 am

Hi Bill

There are a number of reasons why you wouldnt unless you had to X collateralise.

Couple of quick ones would include:

1) LMI premiums higher as the total loan and lvr increases exposure with the 1 lender and as LMI premiums are based on a sliding scale your costs will increase.

I am assuming that your lender will go to 95% + LMI ? as most wont these days.

2) You have answered your own question in that the lenders policy may have changed and that they revalue your 2 securities and dont agree with your valuation. Might even find that the valuation are lower and you are unable to access further equity.

Also you might have sold a property and expect to use the net cash proceeds but the lender values the remaining security and wants you to pay down some of the debt from the cash proceeds to retain the LVR within it is new policy.

This happens all the time especially in the current climate.

If you want to download a few other reasons my website has a free download word document on it.

Richard Taylor | Australia's leading private lender

[coretexParticipant@coretexJoin Date: 2009Post Count: 25]

September 10, 2009 - 1:16 am

Thanks Richard my broker can get me 97%LVR because i am an existing customer i think thats including LMI. So on my new property would i be paying LMI based on my total debt? or just on the new property? i don't quite understand

if my total debt is 103% with my bank and say i wanted to sell for an example would the total LVR on both securities need to qualify at 97%LVR or does the comibined securites need to meet 97&LVR? based on capital growth and appreciation. not with my putting any of my own money in.

[homeloanMember@homeloanJoin Date: 2009Post Count: 3]

September 10, 2009 - 2:11 pm

Hi Bill,
Hope we will help you out in getting right property loan.
please visit georgemortages.com.au for all your property loan and mortgages.
Thanks
George

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

September 10, 2009 - 9:33 pm

George

2 out of 2 great opening contributions.

Richard Taylor | Australia's leading private lender

[mxdMember@mxdJoin Date: 2009Post Count: 45]

September 10, 2009 - 9:44 pm

Qlds007 wrote:

George

2 out of 2 great opening contributions.

and the link doesn't work

[coretexParticipant@coretexJoin Date: 2009Post Count: 25]

September 10, 2009 - 10:39 pm

hmmm

Richard am i right in my last post? or can you correct me