Hi ALL,
I just re finance my residential house and top up the loan amount for another investment home loan. Settlement will be next week. I want to apply another line of credit(or portfolio) home loan against on my residential house equity in the same bank My question is when is the best time for me to apply this? If i apply say next month do you think the bank likely approve it? because i just did refinance and bought investment home loan I afraid that they will denied my application because I apply it to soon. Any ideas??? thanks for your sharing.
Hi Cathy,
The Bank wouldn't (or should I say SHOULDN'T) decline your loan just because it is too close to the original refinance. As long as you have the equity available in your current properties, you have enough income to service the increased debt, and your repayment history / credit worthiness is good – there is no reason why the Bank shouldn't approve the loan. Of course there can be some other factors involved but they are the main things a Bank looks at in the Home Loan Application.
Hope this helps Cathy. Good luck!
Kind Regards,
Matt.
Thanks for that. I feel much more confident now to apply for that. But can I have another question like:
My risendential home owe $290000 and I guess this house value $400000(but I guess the bank does not value this much)
My investment home loan owe $270000 and the value is about $270000.Do you think I have some equity in the residential home even if the bank value at $380000? I dont know how they work out your equity, do they add $290000+$270000 = $560000(owed) – $650000(2 houses value) = $90000(equity left)?
Thanks.
Hi Cathy,
No problems at all happy to help!
You are half right in your calculations but you need to work out your LVR (Loan to Value Ratio):
– Total Debt ($560k) / Total Value of Properties ($650k) = 86% LVR
So you do have $90k (or 14% equity), however all Banks will only lend you up to 80% of the value of the properties without mortgage insurance) and some up to 95% with mortgage insurance.
If your lender will allow you to go up to 95% the maximum extra amount you would be able to borrow (based on the property values above) would be $57,500 ($650k x 95% = $617,500 – $560k (existing debt) = $57,500).
The above is based on the fact that the properties are valued at $380k and $270k (yes, Bank panel valuers are generally slightly on the conservative side), and that your lender will allow you to go up to 95% LVR. Please also keep in mind that as you are over the standard 80% LVR, your loan would be subject to Mortgage Insurance which could add several thousand dollars to your loan.
I hope this makes sense.
Kind Regards,
Matt.
Thanks for a clear explanation, it make sense to me now. Great help. Thank you.
No problems Cathy – more than happy to help out! Feel free to PM or email me if I can be of any further assistance!
Good luck!
Kind Regards,
Matt.
Hi Matt
Not quiet right "all Banks will only lend you up to 80% of the value of the properties without mortgage insurance"
and there are several options to reduce this.Richard Taylor | Australia's leading private lender
Hi Richard,
This generalisation is the case with most big banks.
Would love to hear about your options to reduce it.
Regards,
Matt.
Well wont give all the Trade secrets away but ING for one charge a reduced equity fee which depending on the loan amount can be less than half the LMI premium.
There are 2 other lenders off the top of my head i can think of who also dont charge LMI.
Richard Taylor | Australia's leading private lender
No worries Richard. CBA does also have a 'Low Deposit Premium' that we charge place of LMI, but only for very strong applications. This too can reduce the amount payable, but obviously is assessed on a case by case basis and is not guaranteed for everyone.
Regards,
Matt.
The Bank wouldn't (or should I say SHOULDN'T) decline your loan just because it is too close to the original refinance. As long as you have the equity available in your current properties, you have enough income to service the increased debt, and your repayment history / credit worthiness is good – there is no reason why the Bank shouldn't approve the loan. Of course there can be some other factors involved but they are the main things a Bank looks at in the Home Loan Application.
Hope this helps Cathy. Good luck!
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