Forums / Getting Technical / Finance / Upfront Purchase Costings?

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  • Profile photo of Stevie2013Stevie2013
    Participant
    @stevie2013
    Join Date: 2013
    Post Count: 16

    Question for the brokers as I would like to determine upfront costings. I have been given approval for 320k with borrowing at 80%. I also have 20k equity from another IP available to be released.

    Just to get things clear to me I’d like to look at 2 scenarios,
    1 purchase at 320k.
    2 purchase at 350k.
    Does this mean the following assuming for example buying in brisbane:

    1. Purchase 320k
    Loan 80% = 256k

    Funds required
    Deposit 20% = 64k
    Stamp duty = 10k (approx)
    Purchase costs = 2k (approx)
    Total: 76k

    2. Purchase 350k
    Loan 80% of approved 320k = 256k

    Funds required
    Deposit = 94k
    Stamp duty = 11k (approx)
    Purchase costs = 2k (approx)
    Total: 107k

    Q: would the 20k equity likely to be released on settlement so then I would only need 56k (scenario 1) or 87k (scenario 2)

    As we know purchasing in brisbane doesn’t get me much for 320 but obviously if I head towards scenario 2’s 350k range then that’s quite a lot of up front cash in anyone’s language.

    I will ask around to see if I can get a loan at the 90% through another lender, tried through my current lender but being overseas on foreign income & LVR with current property porfolio at the 80% level it appears it will be difficult.
    Thanks in advance

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Stevie 90% lvr less LMI is doable for an Australian Citizen who is working and living abroad so that issue can be overcome.

    Must admit your question has confused me but in essence the equity loan would approved and funds available to drawn when you needed them.

    You would probably draw down the deposit and initial costs upfront and the balance on settlement.

    Loan secured against the new IP would be drawn on the same settlement date.

    You are right in Brissie at the moment you don’t get much for 320-350K it is crazy out there.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    I’d prob allow a bit more for those purchase costs just to be safe – allow $3k if it’s covering legal, building/pest, rates reimbursement, etc.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of JayJay
    Participant
    @ches
    Join Date: 2014
    Post Count: 8

    Hi Team
    How do you access Equity on a house?(if you have it) does this mean the bank will do another credit check? and how much of that equity will be available to use?

    example: Equity $20k

    will the bank allow you to have the full amount of $20k or will it be 80% of that $20k?

    thanks in advance.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hey Ches

    Yes – it involves an application so a credit check occurs.

    The bank will lend up to 80% of the properties value without LMI. Some will go to 90% which triggers LMI.

    So look at this way – if you had a house worth $100k and a loan of $70k, you could borrow up to 80% of that $100k value ($80k) which means an equity release of $10k ($80k – $70k = $10k).

    That $10k should be set up as a separate loan account.

    Hope that helps.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Adrian CahillAdrian Cahill
    Participant
    @adriannqld
    Join Date: 2003
    Post Count: 127

    Good stuff! Love reading all the comments, thanks for sharing. This is something a lot of us can learn from.

    Adrian Cahill | AdrianCahill.com Personal Development Expert
    http://adriancahill.com/from-investor-to-coach/
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    Here since 2002, however things have evolved over the years.

    Profile photo of Stevie2013Stevie2013
    Participant
    @stevie2013
    Join Date: 2013
    Post Count: 16

    Thanks again Richard & Jaime! Your helping myself & as we can see many others along the way.
    Basically I just needed to clarify that I could get my hands on the 20k equity prior to settlement, i.e. upfront deposit & initial costs as you mentioned so I would essentially not require the full amount of costs from my current funds as some funds are tied up in other banks/shares etc. Of course if I get the 90% through another lender then that won’t be an issue anyway.
    Oh & Richard sorry for any confusion, must admit my questions confuse myself half the time!

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Thanks again Richard & Jaime! Your helping myself & as we can see many others along the way.

    Pleasure :-)

    Let us know how it goes.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Stevie2013Stevie2013
    Participant
    @stevie2013
    Join Date: 2013
    Post Count: 16

    Will keep you posted how the finance side of things goes, but first must apologize, I was meant to write Jamie not Jaime. I’m used to writing that as it’s one of my boss’s names.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    No worries Stevie – I’ve been called worse :-)

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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