Hi,
I currently own a home with a $400k mortgage and have about $500k in equity.
Should I use all my equity, I can't afford to make the repayments.
How on earth do I get ahead then???
Simple if you cant afford to make the repayments then you shouldnt be borrowing any further.
Your home will be at risk if you do not keep up the repayments.
Richard Taylor | Australia's leading private lender
You may be able to redraw some of the equity (say a $25,000 'top up') without needing to redocument the loan. This will depend on your lender's rules.
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I DIY manage with Rentwise.Richard, thanks. You're absolutely right of course.
So, should I sell the house, rent and then use the cash to buy into property for renovation perhaps?
Equity (other than winning the lotto, a sharemarket lucky windfall, a generous gift, or being 'left' something in a will) is about the only way you will ever have funds for deposits, and property purchasing, developing, or improvemants – so yes, that is the way to 'get ahead'. But as already mentioned, that is only 2/3's of the battle – you still need to be able to 'service' ( repay without hardship) the debt, as well as the interest on the equity if you borrow more. Do you mean you cant afford the repayments on your home loan? Or on another investment loan? You have to live somewhere! Naturally, on a new investment loan the rental payments cover (or ideally should) the significant portion of the interest on the loan – and that is the type of property you would need to buy if you don't have much in the way of income to service the loan. Cheers
renosell wrote:Hi,I currently own a home with a $400k mortgage and have about $500k in equity.
Should I use all my equity, I can't afford to make the repayments.
How on earth do I get ahead then???
Maybe this is an option, loan me the money, I will then pay you $50,000 per year interest only over 5 years and then after 5 years you would have made $250,000 profit and then I pay the $500,000 back in full on year 5, so you would go from $500,000 today to having $750,000 in 5 years.
Your solicitor draws up the contract at my cost and my solicitor would look over it before I sign. Easy.
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