Hi all,
i am about to buy an investment property valued at 300k and need to put down a deposit of 10%, i.e 30k….I have been told I can use equity in my home for the deposit. If I were to do this, is my new loan $270k? or is it $300k?
Thanks
PropertySeekerYou would need to get a loan against your current home to get access to teh equity 30K. Then borrow $270k for the rest.
So in total your loans would be $300k.Don't forget about legals and stamp duty and other fees etc.
So you will be going for 90% loan against the investment property $270k and the depost + fees from you equity.
so that 30K from my equity is also consider "borrowed" money and I have to pay interest on that as well?
Thanks
PropertySeekerHi PS
Yes you do as you will need a total amount of $300K (Ignoring acqusition costs) to settle the purchase.
In this example $270K is secured on the new IP and the $30K on your PPOR or other property.
Richard Taylor | Australia's leading private lender
Richard, would you consider that as cross collateralisation? Or would you suggest that PS have a LOC against his house for the deposit & out of pocket expenses?
Yes in an ideal world I would establish a LOC against the PPOR and a totally separate standalone loan against the new IP.
If 1 loan is taken out for the total amount the loans will have to be crossed and not my favoured way.
Richard Taylor | Australia's leading private lender
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