dear board members. Heres my situation. I currently own a townhouse in unley sa. Value conservatively at $200000. I owe $104000 therefore feel i have $96000 equity. I have also built up approx $20000 of extra payments that is available to redraw. My ? is should i draw on equity to finance a 2nd unit or use the redraw. I want to buy a unit for $190000 and will borrow the total plus costs. Would love advice please. I will claim tax deductions ie neg gear but am happy to foot some extra out of pocket expense as see it as an investment longterm. Ie earn approximately $58000. Thank you.
Hi
Use the redraw and equity and why not buy 2 or 3 properties?
A purchase of $190,000 in SA will cost you approximately $198,500 (inc. stamps, etc.).
I suggest you finance 80% of the purchase price through a separate loan (therefore, $152,000). The remaining 20% plus costs would need to be financed by drawing down on the equity in your existing property. You would need to draw down $46,500 ($198,500 – $152,000). As such, your redraw of $20,000 is insufficient. You will need to increase your loan to $151,000 (Being $104,000 + $47,000). You will need to do this first so that you will be ready to pay for the deposit.
Your overall LVR will be less than 80% therefore no mortgage insurance cost.
You should be in a position to qualify for a loan of this size (based on $58k salary + $10k rental income).
Hope this helps.
Cheers
Stu
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