Say I have a 35K deposit and I am going to buy an investment property. I am going to live in there for 6 months to get the FHOG and renovate it, then i'll move out and rent it out.
So I buy the property for 200K. Therefore I will have a 165K mortgage(82.5LVR).
How do I go about getting cash for the reno(say 15K), I have heard of a Line Of Credit, its like a sort of credit card attached to your loan at loan interest rates.Is this correct?
How would i go about organising this?
Would I have to organise this initially so I know that I will be getting this cash available when i reno?
Also could I tell the bank that I will be renovating it and its value will be going up, so they an value the property at a much higher value thus maybe making it easier to get finance(plus reno costs finance)??
Please help here, this has been bugging me for quite some time but I always seem to forget when I get on the forums.
Best Regards,
Christopher Fife.Hi Draconis
No doesnt work quiet like that.
If you intend to eventually rent the property out you would be better off to take out a 95% LVR from day 1 on an interest only loan and invest your surplus funds in a 100% offset A/c.
When you undertake the renovations dip into the offset account.
Most lenders will then allow you to revalue the security.
Richard Taylor | Australia's leading private lender
Good idea there 007. Um but i have no credit rating at all, and the deposit should be crucial in them lending me the money. How would I be able to go about getting a 95% loan with no credit rating. Also the income that the loan will be use will be 2 income earners with i reckon $1000 in total after tax per week. so would they lend to me. If not what other routes can I take for this situation.
Thanks again.
Kind Regards,
Christopher Fife.there is no such thing as a credit rating in Australia.
you either have a bad credit history or you don't.
Sounds like you have nothing adverse which is fine.
Cheers,
As Simon mentioned if you are referring to a FICO score or similar you are not referring to lending here in Oz but in the US.
Grab a copy of your credit file and see what the lender will see and you can make your own mind up.
Alternatively once you have a copy get your mortgage broker to scour over the credit file and give you an assessment.Richard Taylor | Australia's leading private lender
Ah thanks guys.
So having no credit history and those details given above do you reckon that going with the 95% option will work?
Did you have any alternatives to the 95% LVR and using offset as reno costs.
Also just another quick question. I think(kind aassume) that credit cards will hurt me getting a loan as they will see that limit of credit as another amount to be in debt and hence a higher risk, is this right?? is there anything else??
Thanks again guys, much appreciated.
Christopher Fife.
Credit cards don't hurt they sting!
I had a limit upwards of 16k and even though I only owed 1500 the lender was not too happy, so I reduced my limit to 2k which hurt but gave me a huge increase in borrowing capacity as they assume you will always have the card at its limit and you will be paying a minimum of 2% per month so at 16000 = 320 but 2000 = 40 = $280 per month more cashflow.Cheers,
Emma
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