Hi,
I am hoping to begin my investment journey, however I have limited knowledge in this field so was hoping for some help to shed some light on the below for me.In 2010, my sister and I took out a loan to purchase a PPOR for the amount of $420,000.
As I am a staff member of a financial institution, we were able to borrow up to 90% LVR without the need for Mortgage Insurance.
Then recently we refinanced, splitting the loan between variable and fix term for 3 years.
Since our initial purchase in 2010 we have not had the PPOR re-evaluated. I believe due to the demands at the current market, our PPOR has increased in value as such our equity would have increased in lie with this. Would this be a correct thing to say? If so, should we request for a bank valuation on the property?
From this re-evaluation, do you think I can draw some equity out of PPOR loan to use it as a deposit amount towards an investment property? Would this subject me to Cross- collateralization (which is something I do not want to be exposed too) and how is equity different to a line or credit? Please explain.
To complicate matters, this investment property will not be with my sister but will be with my partner. We hope to use 50% of the evaluated equity from the PPOP plus some savings to purchase the investment property. Will this be possibly? How will this work?
In addition since this will be a beginning of our investment journey we were hoping to purchase the investment property under a family trust, but we are not married will this matter?
Also since my sister and I are locked in a 3 year fix plus variable loan, would the bank valuate the extra equity? If so, does that mean we are stuck to use the current financial institute when we take out the Investment property?
In regards to the Investment Property, will I benefit from an Interest only loan, or Interest & Principle loan? What is the differences with these 2 features?
Lastly, if we were to use a Mortgage Broker, what question should I be asking? What if they suggests Cross Collateralisation, does this mean he is taking the easy way out?
Looking forward to getting some advice to this.
Hi and welcome to the forum from me, just a forum member. Looks like more than limited knowledge, but there are many experts here who could help you. What goes around …. so be prepared to help others, especially if you have financial institution knowledge or other knowledge which might help some forum members.
Good luck
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Quachiez
In regards to the Investment Property, will I benefit from an Interest only loan, or Interest & Principle loan? What is the differences with these 2 features?
You always want to take an IO loan + offset account. This way you can reduce the interest and also have access to the money.
Cheers
AndrewsuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHard to know whether it will cross collateralised as this will depend on your employer and the terms of the loan they approved.
Accessing equity will mean a sub loan secured against the equity however the sub loan will need to be in the same name as the current Title holders.
Your Sister is going to have be borrower even though she may get no immediate benefit from the borrowing.
This might be your first hurdle to overcome.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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