hi all,
Me and my partner just bought our 1st home, we bought a 2bed apartment in Sydney CBD which costs around 600k. we have put in 20% deposit and the mortgage repayment would soon start. So my question is when can I actually start in investment properties and how?
Do I have to wait until I pay off X% of our 1st home before we can refinance and use some of that equity? If so how much equity can we take out? I assume say we can take out 100k, and we have 40k saved in 2 yrs, does that mean we can use the 140k as a deposit for buying an investment property?
But one big question would be since we still have our 1st mortgage, how/why would the banks lend to us to buy a 2nd one?
thanks heaps in advance guys and girls!
homersyd wrote:hi all, Me and my partner just bought our 1st home, we bought a 2bed apartment in Sydney CBD which costs around 600k. we have put in 20% deposit and the mortgage repayment would soon start. So my question is when can I actually start in investment properties and how?You already have by buying your own home.
Pay down more on this mortgage as the expenses are not tax deductible
And any capital gain is CGT exempt if this is your main dwellinghomersyd wrote:Do I have to wait until I pay off X% of our 1st home before we can refinance and use some of that equity? If so how much equity can we take out?Depends on lenders allowable LVR
Usually done with a line of credit loan against main residence security for next deposit needed.
Currently your loan is 480k and 120k is deposit then you have 80% LVR which is what line of credit lends to.
So as an example lets pretend that your house goes up in 2 years time to $690,000 in value
(this value increase was based on a guess of 7% p/a annual compounded growth)
and you have managed to reduce the loan to 470,000
LVR = 470 / 690 *100 = 68% (i took off the 000's as they get cancelled out in the maths equation anyway)AS you can borrow to 80% LVR there is some equity
Mortgage + Line of credit loan / Value = 80%
to work this out
80% of value – mortgage left = line of credit
80/100 * 690 – 470 = 552 – 470
Line of credit =$82 kIf cross securing both properties lenders may go up to 95% LVR
loan one + loan two / property one value + property two value.
(470 + 420) / (690 + 420)
890/ 1110
equals 80% LVRThis way you stand to lose both houses if you default.
See other postings on cross securitising as risk is higher.I assume say we can take out 100k, and we have 40k saved in 2 yrs, does that mean we can use the 140k as a deposit for buying an investment property? But one big question would be since we still have our 1st mortgage, how/why would the banks lend to us to buy a 2nd one? thanks heaps in advance guys and girls!
[/quote]Homersyd,
Good on you that you've bought your own property! Syd market is tipped to increase in a big way in the next few years! BIS Shrapnel.
About your next investment property, you'd need to have at least a 10% to 20% deposit. Either in savings, equity in your home, or family/friends loan. Also there is a creative way if you have enough super saved, you could self manage your own super and use that as a deposit and lend the balance?
Obviously you should consult a financier and they can assist.
If you would like someone to see you in Sydney, I can refer a property investment consultant to see you and help show you how to obtain your next investment.
Eric
So lets derive a magic formula for this
(Loan amount in two years time + extra loan in 2 yrs time) / Value of house in 2 yrs = LVR (0.8 is 80% LVR)
(loan amount in two years time + 100,000 ) / (original value * (1+.07)^2 = 0.8 (0.07) is 7% p/a growth ^2 is power of 2
Two being the term of the interest rate being two years you could use 3 years and it would be (1.07)^3
(loan amount in 2 yrs +100,000) / (600,000 * (1.1449) = .8
(loan amount in 2 yrs + 100,000) /686940 = .8
multiple both sides of equation by 686940
loan amount 2 yrs +100,000 = 549,552
subtract 100,000 from both sides of equation
loan in 2 yrs time = 449,552 and expected house value in 2 yrs being $686,940
to allow 100,000 to be taken out for a LVR at 80%duckster wrote:So lets derive a magic formula for this
(Loan amount in two years time + extra loan in 2 yrs time) / Value of house in 2 yrs = LVR (0.8 is 80% LVR)
(loan amount in two years time + 100,000 ) / (original value * (1+.07)^2 = 0.8 (0.07) is 7% p/a growth ^2 is power of 2
Two being the term of the interest rate being two years you could use 3 years and it would be (1.07)^3
(loan amount in 2 yrs +100,000) / (600,000 * (1.1449) = .8
(loan amount in 2 yrs + 100,000) /686940 = .8
multiple both sides of equation by 686940
loan amount 2 yrs +100,000 = 549,552
subtract 100,000 from both sides of equation
loan in 2 yrs time = 449,552 and expected house value in 2 yrs being $686,940
to allow 100,000 to be taken out for a LVR at 80%Thanks for your help duckster, I will try digest the maths and get back to you
INTERNATIONAL EMPIRE wrote:Homersyd,Good on you that you've bought your own property! Syd market is tipped to increase in a big way in the next few years! BIS Shrapnel.
About your next investment property, you'd need to have at least a 10% to 20% deposit. Either in savings, equity in your home, or family/friends loan. Also there is a creative way if you have enough super saved, you could self manage your own super and use that as a deposit and lend the balance?
Obviously you should consult a financier and they can assist.
If you would like someone to see you in Sydney, I can refer a property investment consultant to see you and help show you how to obtain your next investment.
Eric
Yeah that’s why we finally bought our own property, since we heard all over the news that prices are gonna skyrocket, it was quite nerve wracking tho since we bought it at an auction…
Which was also the first auction we actually bid at, so it was very exciting when we got it
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