Hello Fellow Investors and Alike,
Firstly thanks for the invaluable info available on this website due to active participation of members like you.
Moving to less cheesy stuff and on to business..
I currently live in a 3 bed 18 Sq house that I am planning to rent out and move on to a western suburb (point cook) in Melbourne.
I am looking to purchase a land and build a bigger house on it.
I do not have great deal of Equity in my current house about 40k which I am planning to cover the initial deposits for new PPOR.
I do have about 50k sitting in the offset account and I am unsure on how I should structure my new mortgage ie –
– WIthdraw offset amount and use it as deposit or
– Use LOC from current PPOR and rent this out
I am not sure what impact it has on gearing if any when my current home would be rented out.
I would really appreciate any suggestions in this regards.
Thanks for your time.. Cheers
Hi TCM
Firstly welcome to the forum and I hope you enjoy your time with us,
Without full details it is difficult to provide you with an accurate answer however depending on the numbers the way you would normally try and structure something like this would be to covert your existing loan to interest only, then make application for an equity loan to 90% of the market valuation.
Use the available equity loan as deposit on your new property together with your offset funds (assuming that the new property is for owner occupation) and then borrow separately against the land to cover the construction costs etc.
Depending on the overall lvr will depend on the actual LMI cost so probably get your Broker to run the numbers on both scenarios to see which one works out best and reduces your upfront expenditure.
Hope this helps and good luck with the move.
As always any questions ask.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
TheCuriousMind wrote:HI do not have great deal of Equity in my current house about 40k which I am planning to cover the initial deposits for new PPOR.
Hi and welcome aboard.
Is the $40k actual or accessible equity?
If you don't mind me asking – what is the estimated value of the property and the loan amount?
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]
Thanks for the advice it makes sense.
I shall run numbers with broker, on that note any recommendations in melbourne?
Hi Jamie, thanks for your reply.
40k is accessible equity sitting in my LOC account.
Q – is using the LOC on existing PPOR the best way to move forward for upgrading it?
Thanks
Why would you use some random broker in Melbourne and try to explain to him the great information that two brokers have already given you in this thread? Makes much more sense to use Richard or Jamie as your broker. Most broking work happens via email and phone these days, so you have luxury of using a great broker regardless of where they are based.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
TCM if the LOC is already set up and the accessible funds just sitting there then absolutely no reason why you wouldn't use it.
Keep the loans separate and you can't go to far wrong.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard. I was keen to do that but when stumbled across heaps of discussions and topics around this I was confused.
As long as you don't contaminate the LOC with your current loan you should be fine.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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