Hi All
Relatively new to this so bear with me.
I’m looking to add to my first investment property by using existing equity. We have an IP that is probably valued at about 120k over what we purchased it for. Also our PPOR has about 700k in equity.
My question is what do I need to do to draw a loan for another IP purchase and how can I avoid cross collateral loans?
Also is there a way to protect against losing my home on these IP’S?
What you do is draw a separate equity release against either the PPOR or investment property, interest only, offset account etc These released funds act as the deposit funds for the future purchase and any government charges.
When the future purchase is made, the remaining amount is then borrowed solely against the new property being purchased.
Get an investment focused broker to set this up for you and they can ensure it’s all done correctly and that the rest of your finance structure is appropriate – we knock this stuff through all day that it’s easy, but for an early investor it can be a bit more daunting. I’ve actually written an article on how to structure equity deposits previously here: http://www.precisionfunding.com.au/cash-or-equity-for-deposit/
Ensure you get this done NOW before making a purchase, so that the deposit funds can be ready and waiting when you need it.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Borrow against the existing property a d separately borrow against the new prooerty
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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