Hi everyone,
I am a little confused on how you come up with the deposits when looking for property. i have about 100k in equity on my property’s so my ? is, how do you come up with a deposit to buy another property. i know you can use the equity to 100% finance one but is there another way? Looking forward to some explinations. Cheers, Craig[
]Hi Craig,
Many investors now use deposit bonds. I actually don’t have any experience with them personally, but I believe they work well.
They are available from most major banks and other sources. You pay a set fee, and the company gives a bond to you for the amount of the deposit until settlement. I believe the fee is a lot lower than the interest that would be payable on the deposit if you were to access a loan for the same amount,
Hope this helps a little,
Sue []“Be careful not to step on the flowers when you’re reaching for the stars”
Hi Coopernator,
100k equity can help you purchase a 500k property,
How!
Banks are willing to loan 80% borrowings, if you have 20% cash available. This is called LVR (Loan Value Ratio)
Cheers,
sisOh for 100% finance,
With a 100k equity, you can purchase a 100k property or less, thus meaning 100% financed.
Cheers,
sisHi Coopernator
If I could add to SIS’s comments, I don’t know whether the other bank’s will follow suit, but the NAB now has a new policy for Investment Property purchases only – you now need to have 25% deposit for the local loans officer to approve the deal, otherwise the application has to be sent to a higher approval level.
There still may not be a problem, but the higher level officer will assess the application from personal judgement rather than the computer making the decision based on facts and figures.
This can be both advantageous and disadvantageuous depending on individual circumstances.
Hope this helps….Ron
Craig,
The actual steps are.
You set up a facility whereby you can draw 20% plus costs for the new property. If you are unsure of what you will be spending then just extend the current loan to 80% of valuation.
Draw the deposit when you need it and the remainder at settlement.
Set up a new loan with this or another lender for 80% of the purchase price.
Another way is to set up a LOC against your current property then draw as you need it. Little more expensive but more flexible.
Lastly, as suggested, buy it with a deposit bond but you will need to follow the above suggestions by settlement.
You are already aware of cross collaterising the two properties.
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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