Hey yall
My current situation is that we are living in our PPOR, mortgage $280k with CUA (fixed for another 6 months). Got a market appraisal for $370k a few nights ago (bought it for $315 six months ago, have spent $15k in renos).
Signed a contract yesterday on a house for $320k which we would love to move into. We would then rent our current house out for $550 a week (extremely tight market, it would rent out quick).
Savings: $17k
We would love to purchase this new house with only the $17k, but not sure if its enough? Its only a 5% deposit, but then we would also have to add onto that stamp duty and also LMI. Do banks lend that much? My reasoning for not touching my equity yet is that we plan on buying another IP in about 8 – 12 months time, so want that there for when we plan to do that.
Im currently with CUA and the lady just kept pushing cross collateralising …. even though one is a PPOR and one is an IP. WAAAAY too messy. Dont want to CC.
Any advice appreciated
I woulda sorted this out before signing a contract but a house came up unexpectedly that ticked all our boxes so we had to get it under contract before someone else did.Thanks.
Hi Karen
Congrats on the next purchase.
It looks like tapping into the equity in your PPOR is the only way you’re going to get this done as the $17k isn’t enough to cover the deposit and costs.
Best to set up a second loan with CUA so you can distinguish this IP debt from your PPOR debt.
At least the borrowed funds will be tax deductible whereas your cash isn’t. I’d try to hold onto that cash and stash it in an offset against your PPOR for a rainy day.
Hope that helps.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Karen,
Looking at the numbers provided it would seem you may have a few hurdles to jump through before you can tuck this one away.
The appraisal you rceived for your property is not a lot of use to you as a number for finance purposes. Banks will want a certified valuation done on the property and this may (may not too) vary from the $370 appraisal you have received.
Now for one minute let us assume the valuation is the same as the appriasal.
If you can get a 95% loan on your current home you'll release a further $71K (less LMI costs). This money will be sufficient for you to leverage into your new property as follow:
If you purchase the new property with a 90% loan you'll need around $32K (5% deposit) + a further $16K for purchasing costs.
On top of this you will need to allow for LMI of around $6K (using an indicative rate of 2% as LMI premium). In total, if you bought this second property with a 90% loan you will need to access approximately $55K in equity.
After all said and done it seems as if pretty much all of your available equity is going to be consumed by these two properties. This means you will be very highly leveraged at this stage of your journey. In the current market I am not sure this is a great place to be.
Is the 'lady' an employee of CUA?
I always recommend using a broker as they look at things from a borrowers perspective rather than the banks. This is moreso the case if they are investors themselves – Jamie is this. People tell me he doesn't bite.
Yeah but derek we have to move, and I refuse to pay rent
No room in our house for the next baby which is due to arrive in June!! Who said having four kids wouldnt be too much of a life change haha!! We are currently in a three bedroom house with a family of five (soon to be 6) …. the new house is a 5 bedroom with a granny flat out the back. Plenty of room for a family of 6, plus the 5 dogs. Plus my husband is losing his work car in three weeks, but if we purchase on this particular road my husband's work bus will pick him up and take him out to Hay Point for work (45 min drive each way) for free each day. So it saves us buying another car + fuel + rego + insurance.
So thats all the reasoning we have for buying again so quick. On the plus side, hubby is on a great wage so servicability isnt really a worry.
Yes she worked for CUA.
Ill get onto a broker tomorrow. Looks like I need to do a bit of shuffling to get this to work. Id much prefer to have to change the plan for getting the house, as opposed to renting. Rents in Mackay are just ridiculous at the moment. Its cheaper to buy when your looking at the bigger houses – even the old ones. The cheapest 5-bedroom house is $700 a week. Even the 4 bedroom houses start at about $500 a week. Dead money when you can pay off a house for that cost.
I don't think the borrowed funds would be tax deductible though ??? Isnt the new purchase going to be your PPOR ??
eilatan28 wrote:I don't think the borrowed funds would be tax deductible though ??? Isnt the new purchase going to be your PPOR ??Correct – I thought Karen was buying a new IP but your right, it’s a new PPOR.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Ive gotten onto Richard. We are leaving the cash as it is.
But with this purchase Im getting an equity loan with CUA for the purchase costs and deposit, then getting the home loan with that.
Problem solved …. a different route … but the same destination in mind
Excellent, you're in good hands.
All the best with the move.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I woulda sorted this out before signing a contract but a house came up unexpectedly that ticked all our boxes so we had to get it under contract before someone else did.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
