Hi all,
I need some advice before I commit to another mortgage from the property investors out there.
My current situation is as below:
Unit in Lower Templestowe Melbourne
Mortgage: 260K
Current Value: 410K
House in Marsden QLD
Mortgage: 240K
Current Value: 320K
When I purchased above I borrowed 95% and paid LMI which my IP adviser really didn’t recommend because of the high risk. But I went ahead and did it because I thought I have to be aggressive a bit and take a risk otherwise I will never get there. I managed to lower my LVR to below 80% thanks to recent property price rise especially in Melb and QLD. Because I was ready to take the risk, I managed to acquire over 250K equity in both properties.
Now I am ready to commit to another big mortgage and borrow up to about 95% of a purchase price to buy a house in Melb East for about 450K to live in and turn the unit I currently living, in Lower Templestowe Melb to an IP. I know this is going to be a big risk with all the other mortgages I have. Our combine income is about 120K.
I know if property prices in Melb keep going up like this I will be alright in few years time. Unfortunately I have a feeling that’s not going to happen and I am very scared that Melb will end up like Sydney and I will end up with a big mortgage higher than value of the properties.
Since I haven’t been living here for long, don’t know much about how property cycles worked in Aust in the past, and would like to get some advice on what you people think or predict about Melb property market’s future?
amaljaya
I'm older and have seen more bad times than many.
My advice is keep the LVR under 80%; especially in the current economic climate and rate rises.
Paying down debt and consolidating your financial position is part of a smart investment plan. Plenty of people go broke because they have loads of equity, but can't service the loans, and then have to sell at a loss when the market stalls or drops.
If you are on this forum asking us if you should be taking such a big risk, then the answer is there in front of you; you are not comfortable with it, so don't so it.
Investing in property is no fun if you are worried about the values and interest rates every week.
amaljaya wrote:I managed to acquire over 250K equity in both properties.
I calculate only 230k in equity on your figures Amaljaya? LA has given wise advice. Keep below 80%. If you take your potential portfolio of 1180k and take out loans of 80% then you can have access to 944k. Your current loans of 500k would increase to 860k by borrowing 80% of the 450k for the new property. Remember you need to pay also for s/duty and legals. This retains a buffer of maybe around 50 – 60k equity in your portfolio assuming you have all the loans approved to 80%. It looks a bit tight to me and you are putting your faith fairly heavily on the property prices going up.
Good luck with the decision, Ian
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