Lets just say you buy a house for 300k In 1yr it went up 30k, So u use the equity for something (Anything) Do you have to refinance the loan for 330k??
If you are asking whether you have to refinance in order to draw out your equity then the answer is YES.
There are only two ways I know of to access your equity. Either through selling the property, or taking out a loan against the equity.
So you might have bought a house for $300k but it is now worth $330k…this doesn’t mean you have $30k sitting in your bank account.Also something to be aware of is that if you want to maintain a 80% Loan To Value Ratio (LVR) then you will only be able to borrow a further $24k (80% of $30k). You won’t be able to borrow the full $30k and maintain an 80% LVR.
Ryan McLean | On Property
http://onproperty.com.au
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homersyd wrote:so why would one actually wanted to keep LVR to 80%? Is there any benefits of doing that?If you go over 80% LVR then you will have to pay LMI
@ homersyd – Yeh you have to pay lender’s mortgage insurance if you go over 80%. This is you paying the bank for the banks increased risk in the deal.
Also, having few properties with the LVR over 95% can sometimes limit your borrowing capacity.
Ryan McLean | On Property
http://onproperty.com.au
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