All Topics / Help Needed! / IP Deposit help

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of jesse pawlowskijesse pawlowski
    Participant
    @pennypacker
    Join Date: 2015
    Post Count: 7

    Howdie everyone I’m looking to purchase my first property and I’m looking at starting with an investment property. I would like to be able to purchase a property around the 400-450k mark. I have an 80k despot saved, my salary is 122k before. My living expenses are very low so I’m looking to maximise as much of my cash flow as possible. My question is for borrowing to purchase my first IP will the lenders require a 20% deposit or could i borrow more.

    Thanks

    Profile photo of sampson_701sampson_701
    Participant
    @sampson_701
    Join Date: 2013
    Post Count: 20

    Well done on your savings. I am by no means an expert but will reply since there are no others yet.

    My first IP was bought with 10% deposit and I believe you could even do 5% with guarantor if you wanted to. Steve in his program generally recommends 20% for various reasons.

    Seek the help of a mortgage broker. Jamie Moore who you will find on the forum has been very helpful to me and many others.

    Cam
    Participant
    @cams
    Join Date: 2016
    Post Count: 4

    Since APRA threw a spanner in the works last year. You will probably find that interest rates are a fair bit higher when borrowing 90% compared to 80%..(My last property I got a I/O 4.49% on 90% LVR, 3 year honeymoon rate and was pretty happy with that) Keep in mind that you will need to factor in LMI as well when borrowing over 80% LVR (this gets added on to the loan).Other costs that you need to workout as well are Stamp Duty, Conveyancing, Building + Pest inspection, Mortgage Rego fees etc.. They are going to eat in to your deposit by about $17k or more depending on the purchase price of the property and which state that it’s in.

    One other thing to consider is the unlocking equity in the future. You will have to wait longer if you go 90% now.

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    You can get 90% LVR’s fairly easily, so factoring in stamp duty and other government charges, you’re realistically looking at an effective ~15% deposit.

    Well worth it if you’re looking to grow an investment portfolio, as the LMI will allow you to leverage into more purchases sooner.

    I’ve written an article which outlines the cost/benefit of LMI for investors which you can read here: http://www.precisionfunding.com.au/lmi-friend-or-foe/

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of jesse pawlowskijesse pawlowski
    Participant
    @pennypacker
    Join Date: 2015
    Post Count: 7

    Thanks For the info guys. That was an interesting read Corey.

    Currently I’m saving at an average of $800-1000 a week. So considering my saving capabilities i estimate that i should have saved 100k by july. So the question is 1. should i aim for more savings or 2. put my money into an investment sooner rather then later. Is the money better off invested in an IP or continue to save for a more comfortable deposit. Im not in a serious rush but definitely want to get a purchase by the end of the year.

    Again Thanks for your help

    Profile photo of CodieCodie
    Participant
    @codie
    Join Date: 2016
    Post Count: 13

    Hey Jesse, no expert myself just thought I’d throw my opinion in..

    My personal thoughts if I was in your situation, would be to use the money entirely to avoid low equity insurance (appx $17k in your case) and depending on your situation, after 6 months refinance & go for either your own home or another IP.

    I’ve personally just gone through Westpac in QLD, and used a 40k deposit on a $585k property. 21k in low equity fees alone!!

    Not sure of your situation exactly but why not do a 450k build, use your savings, get the GOVT grant (depending where your based) then rent it out after being in it for 6 months?

    You will be able to depreciate your new IP in 6 months, and with the income your making the tax write offs alone are enough to make anyone excited..

    Hope it helps,

    Codie

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Codie

    In QLD whilst you can keep the Building Boost if you rent the property out in 6 months you will loose the concessionary Stamp Duty.

    You are required to occupy the property for 12 months to claim this.

    Expensive to pay it back in month 7.

    Hi Jess, Maximise your borrowings. I would go for a 90% lvr and keep the cash up your sleeve. You never now when you might need it.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

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