Can you please advise me on the subject of equity….improving equity, or the value of a property to than obtain an increased equity in the property…..once done, can I than use this increased amount…$875k increased to $1,600m….this difference of over $700k….can this very amount be used to purchase another property with no further money needed other than this very equity increase?
Hi Goldfisk
I don't quite understand the questions but I'll give it a go.
There's a difference between "actual" and "useable" equity.
For instance, a property worth $200k with a loan of $100k has an "actual" equity amount of $100k.
However, the bank won't let you access the entire $100k because that would leave you with a 100% loan.
The max they will go up to is generally 80% – which in this instance would be $160k – so an equity release of $60k.
Some lenders will allow you to go up to 90% of the properties value – which will allow you to access a bit more.
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]
Hello Jamie,
Thankyou for your comment. so to get a better understanding, the 80% equity in your example…being $60k could this very $60k be used as a deposite on the next loan? If so…exactly much be the next loan. How much would I have to purchase a second investment property with?
Thanks,
Roezetta
You can draw upon the equity in your existing property either upto 80% or upto 90% depending on the lender and loan amount. However it is very important to set up the facility as a separate facility and not top up the existing loan for tax purposes.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Hi again goldfisk
Yes, the $60k would be used to cover the deposit/costs on the next purchase.
In regards to the second part of your question – it's impossible to comment on your specific situation without knowing the finer details of it.
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]
Hello Jamie,
Thanks again for your comment….so to recap….if a deposite of say 10% was required at a lend of 90%….would you say…the 60K represents the actual 10%? Therefore the loan would be…600K ….??
Regards,
Roezetta
The $60K in that case can be used towards a deposit, however you need to remember that you will also be up for costs such as stamp duty, etc, so if you don't have enough in your savings, these costs would have to come out of the $60K meaning less towards a deposit.
How much of a loan you can apply for depends on a few things, serviceability being one of them.
Cheers
Tom
9GoldFisk wrote:Hello Jamie,Thanks again for your comment….so to recap….if a deposite of say 10% was required at a lend of 90%….would you say…the 60K represents the actual 10%? Therefore the loan would be…600K ….??
Regards,
Roezetta
Hi goldfisk
You need to account for purchase costs as well – stamp duty being the largest.
You really should chat with a broker or banker about your situation. They'll be able to answer your questions and run some scenarios for you.
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]
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