Equity

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@piadmin
Join Date: 2013
Post Count: 3,225
August 13, 2005 - 12:25 pm
Just to clarify for everyone, including myself as I haven’t used equity to obtain a loan:
Property Purchase $200,000
Outstanding Loan $100,000
Market Valuation $400,000
Equity To Borrow On $300,000
Property Purchase $200,000
Outstanding Loan $100,000
Market Valuation $200,000
Equity To Borrow On $100,000
Is this correct or a ridiculous notion?
Cheers,
Jacob.
‘Stay Happy and you’ll be Perfectly Fine’ – Jack
Mortgage Hunter
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@mortgage-hunter
Join Date: 2003
Post Count: 3,781
August 13, 2005 - 12:29 pm
I am not quite sure what the scenario is you are painting so cannot advise on whether it is right or not.
But remember you always need to leave equity in the deal for the lenders security.
20% or as low as 5% with LMI.
Hope this helps.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Rikky
Member
@rikky
Join Date: 2005
Post Count: 313
August 14, 2005 - 9:32 am
On the first deal
Loan is $100,000
so you must leave at least $125,000 in the deal.
$100,000 in the loan plus
20% equity (in most cases) so the numbers look like this.
Banks hold %20 equity plus loan amount
Loan amount $100,000
%20 equity $25,000
Total equity banks hold $125,000
So avalible equity would be as follows.
$400,000 property value
$100,000 loan
$25,000 on top of loan amount for equity
$275,000 avalible equity.
Hope this helps
Cheers Rick
Monopoly, my favourite game
micah
Member
@micah
Join Date: 2005
Post Count: 17
August 15, 2005 - 2:04 am
Spi,
The concept you are using is correct. Available equity is value minus existing loan. In reality you will have less available (otherwise the bank is giving you 100% finance) You can get very close to 100% though, depending on which lender you use.
Administrator
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Post Count: 3,225
August 15, 2005 - 3:59 am
Thankyou to the respondants. Equity is understood.
Cheers,
Jacob.
‘Stay Happy and you’ll be Perfectly Fine’ – Jack
GPSnetwork
Member
@gpsnetwork
Join Date: 2005
Post Count: 313
August 15, 2005 - 11:53 pm
You’ve done well to date Spi, you should be just about ready for your next purchase.. Make sure you do your research..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.au