Hi,
We are living in our own home and bought our 1st IP this year. The bank loaned us 100% for the IP as they used the equity in our own home loan to cover the IP.
We would like to buy a $155,000- IP 2 bed, brick unit but don’t want it connected in anyway to our private home mortgage. Will banks lend us all the money just using the mortgage of the new IP as collateral? Thanks in advance – first time on here! [
]Hi Kittee,
Is the IP you bought positive geared? If it is I can suggest you access those funds to buy you more property. The key is to access as much return on your cash outlay, so you can re-invest into more property. The suggested positive return is 25%. This is the CoCR which has to be looked at closely when assessing the risks involved.best regards
Andrew
Hi Kittee,
Is the IP you bought positive geared? If it is I can suggest you access those funds to buy you more property. The key is to access as much return on your cash outlay, so you can re-invest into more property. The suggested positive return is 25%. This is the CoCR which has to be looked at closely when assessing the risks involved.best regards
Andrew
Good first post Kittee – welcome [
]It’s not hard to do – what you are talking about is called a ‘self-securitised’ loan for the new IP, ie where no other security is given because the lender is happy with the deposit and your ability to service the loan (as well as all your other debts).
The level most lenders are comfortable lending to for self-securitised property is normally around 90% lend or 90% LVR (loan to value ratio). You could get loans up to 95% LVR for this investment eg with ANZ or Suncorp and capitalise the LMI without too much trouble, or up to 97% and pay LMI (which is the same difference!) with others but of course the higher the lend, the bigger the repayments and lower the returns. If the LVR is less than 80% you’ll avoid paying LMI and save even more in repayments.
Really depends on your income and strategy and I always recommend seeing a broker rather than one bank to ensure you are getting a good range of options to chose from, it’s normally free and can save you heaps of time and $$. There are lots of us on the forum. The other good option if you’re comfortable with disclosure is giving the group a full brief and letting everyone here help – it is what everyone does best!!
Good luck!! [
]Hi Andrew,
Yes it is positively geared and has gone up dramatically in value in 5months. As we have only had it for 5 months we do not have much cash from it yet – so how could we use that property as collateral. Thanks very much for your reply[]Hi Kittee,
I think Mel did an excellent job explaining the actions that need to be taken. Remember it is a refinancing or redrawing of your existing loan. It works well provided you use the funds for investment purposes.all the best!
Andrew
Well done!
Normally lenders won’t accept a reval within 6 months, but you are close enough to push it through probably. The easiest way to get a new IP loan that is self-securitised is to refinance your current loan for PPOR and IP and use those funds as a deposit for a new loan.
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MelThanks Mel,
I understood nearly all that you said, but please tell me what PPOR stands for. No I’m not dumb just new at this…..lol
thanks []
[/quote]Yes please I also need an explaination of terms I have LVR (loan to value ratio) ROI (return on investment) MI (Mortgage insurance) but what is PPOR and LMI
Thanks[8D]LMI lenders mortgage insurance
PPOR primary place of residencei wanna be freeeeeeee
Mel is spot on and will be a great asset on any investors team.
Just to add a tiny bit. One idea could be to pull a 20% deposit from your PPOR loan if possible. Then buy an IP with an 80% lend.
Now the properties are not x-colled and the loan is structured to avoid LMI.
The entire 100% interest bill will be tax deductable if the property is available to rent.
Hope this is clear.
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Simon,
Thank you very much. Yes what you said was very clear and I think it may be possible for us to access 20% from our PPOR loan and borrow the other 80% for the IP.
1 Question though?? Could you please explain though what you mean by saying, “now the properties are not x-colled”?[]Sorry Kittee,
Slipped into some broker jargon there.
x-colled is cross collaterised which is when the properties are secured against each other. This tends to be the banks preference and is OK for an investor who just wants one or two IPs with a buy and hold approach. As an investor gets a little more sophisticated then it is better to avoid being x-colled.
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Mortgage Hunter
YOu might be saying that what i did was right. I refinanced my own home and used the collateral to pay the 20% deposit then borrowd the 80% to get the house all on Interest only. Is this the best way? and if it is I did this throught good luck rather than good management. Both properties are increasing in value and I now want to get +ve properties.
Well done.
Another good idea is to split the PPOR loan to show the different amounts seperate.
Makes your accountants life easier!
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985
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