Hi,
I am in the process of selling my first home to build again, my question is, with the cash I make can I use that money as security for a investment loan (% 100 interest only) then buy an IP, once i have brought the IP can i then use that cash to purchase the land and start the building process, I will be renting in the meantime.
Thanks
Hi Azza
Welcome aboard.
I don’t quite understand the question.
Are you asking if you can use the money from the sale of your current home to buy an IP and also purchase land?
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]
Hi Jamie,
I wonder if the poster is asking can a term-deposit be used as security?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
The sale funds can be used as a deposit to purchase land and build an investment property. If you have a contract signed for the sale of your property, you can use a deposit bond to be able to put the investment under contract if timing is tight.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
What he’s asking is will the bank allow him to change the status of his security from cash to land and what would the conditions/restrictions/complications be in doing that.
Not quite as simple as all that post NCCP but with the right lender Yes it can be done subject to a maximum lvr of 80%.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sorry for the confusion,
What im trying to achieve is using the cash as deposit on a investment loan but il borrow % 100, so I get my deposit back then purchase the IP, with the cash I used to obtain the loan for the IP then use that to borrow for my mortgage to purchase a block of land and build my home to live in. Hope that makes more sense,
Thanks
Its probably best if you first buy/build your main place of residence (home) before you start thinking about getting a second mortgage for an investment property. If you are thinking about building your home then from the time you purchase your block of land, apply & obtain building permits & build your home you should have a bit of capital gain (amount varies depending on your chosen area). Wait for around 2 years till you have a sufficient capital gain on your home and then use it to purchase your 2nd property (investment property).
Having said all this be very careful that you don’t over commit yourself as the main reason for investment is to better our lives financially for the future. Over commitment could be just the opposite of investing in our future.
Regards
Frank Satar
Hi Azza
Yes totally agree with what you are trying to achieve and as i mentioned it is possible with the right lender.
Not sure why newbie Frank would make such a comment as there is absolutely no reason why you would do it this way around.
If interest risk is a concern then you can always take a fixed rate on the land and construction loan.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qld007: This newbie Frank (me) might be younger than you but has been in the industry since 1995. When I was operating in Melbourne we were amongst the top 10 brokering firms in Victoria settling more than $3,000,000 worth of loans per month for many years so please do some research before you call someone a newbie!! I am an experienced investor (37 years old) with a portfolio of 5 properties in Australia & in Thailand.
You are advising a new investor that its ok to take out 2 mortgages, one being an interest only 100% loan which also attracts the highest interest rate. What happens if tomorrow the market goes down and he/she ends up with a negative LVR (loan to value ratio) on the property which is 100% mortgaged on an interest only loan? What would you advise them then? “Oh it was only a forum and I only gave my personal opinion” will not help this person. As a professional you also need to consider & explain the worst case scenario as well and present the best & the safest way to go about things.
Regards,
Frank Satar
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