New to forum, great resource for like minded people.
We are looking to purchase a second IP. I live in accommodation provided by my work and therefore bought our first IP some years ago which is neutral to slightly negative geared.
Our finances are situated as below:
IP #1 Value $460,000
IP Loan $193,000Share Loan #2 $130,000 purchased shared with IP#1 as securityCar Loan #3 $20,000 with redraw available of $17,000 (Westpac Choice offset account) – IP#1 as security
Given the above we have $117,000 in equity but I am a bit confused on my calculations
$460,000 x 80% = $368,000 – 343,000 = $25,000 (LOC or interest only loan)
or
$460,000 – $343,000 = $117,000 x 80% = $93,600 (LOC or interest only loan)
Which of the above two is correct and then what Value property could we purchase? Loan serviceability should be ok.
Really depends on the loan to value ratio you are after. If you want an LVR of 80% and do not want to pay LMI then:
$460,000 x 0.80 then you can draw up to $368,000 against present property which means you have $25k available
Assuming you borrow 80% of new property you have $25k equity contribute. You would need to cover fees BUT $25k as a 20% deposit leaves $125k.
Without knowing full facts eg are you prepared to pay LMI and also servicing strength of deal it is hard to give you a precise number
Thanks Sprio
Not too fussed about LMI but $125k doesn't equate to much here in WA. We could service loan repayments up to $350k without any rent at all.
We might be best to put some coin away and come up with some more deposit.
Thanks
Assuming you are happy to cop some LMI and based on the fact that you can service the loan then should be able to borrow in the region of 450K.
Couple of ways of going around this but in the end boils down to level of confort.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Assuming you are happy to cop some LMI and based on the fact that you can service the loan then should be able to borrow in the region of 450K.Couple of ways of going around this but in the end boils down to level of confort.
Cheers
Yours in Finance
Thanks Richard,
Could you give me some rough numbers on how we could get hold of $450k for an IP
Sure
$460,000 x 90% = $414,000
$414,000 – $193K + $130K + $20K = $74K.
Assume acqusition costs come to 24K you would be left with $50K.
Assuming a 90% IP lend then $50K on $500K purchase would mean borrowing $450K plus LMI.
Course if the acqusition costs are more then you will have less to play with but could always go 95% lvr if needs be.
Hope this helps. As i say few variables.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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