Forums / Getting Technical / Finance / Equity release refinance

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of MattMatt
    Participant
    @proculeius
    Join Date: 2017
    Post Count: 12

    Hi Experts!

    So.. the day has come, two bank valuations later and consistent figures, I’m in the position to refinance for equity release to purchase additional IPs, however I need to seek some advice on the best way forward. At the moment this is the current outlook;

    87.68% LVR to release 200k (or so)
    Potential purchase of 4 IPs around the 250-300k mark (positive cash flow)
    Current IP is currently tenanted.

    My worry is that obviously going about the 80% LVR sends red flags to everyone,
    and borrowing such a significant amount of debt has to be structured carefully and
    have a risk management plan in place. Would you stay under the 80% LVR or boldly push forward
    and try and secure the best interest rate possible?

    All feedback appreciated.

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

    Hi Matt

    Not sure why you think red flags would be raised for a lvr over 80%.

    Loan would be Principal & interest (IP > 80%) but there are some fairly decent rates around.

    As long as you can service then no reason why you wouldn’t go that route.

    Cheers

    Yours in Finance

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

    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 MattMatt
    Participant
    @proculeius
    Join Date: 2017
    Post Count: 12

    Hi Matt
    Not sure why you think red flags would be raised for a lvr over 80%.

    Hi Richard,

    I was more or less going by Steve’s way of thinking r.e. potentially becoming a credit risk in future by taking out a >80% loan however I’ll most likely go down that route. Thanks for your input.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    You could always start at 80% and increase later – but harder to cash out later.

    You don’t want to incur LMI unnecessarily. What if it takes you a full 12 months to buy the 4 properties? There could be growth in the meantime, which might have meant less LMI if you had waited.

    Also there is a question about the deductibility of LMI when you are incurring too soon compared to the investing.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of MattMatt
    Participant
    @proculeius
    Join Date: 2017
    Post Count: 12

    You could always start at 80% and increase later – but harder to cash out later.

    Yeah I’m forming the same view the more time that passes, best settle in the one hit, I’m only paying for what I use when the equity gets put towards another loan. In the meantime it will sit dormant, so fingers crossed the application is a success.

    Thanks Terry.

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

    Hi Matt

    Are you looking to do an equity release for $200k at 87% ?

    If so – that’s not an easy deal to get approved!

    Banks aren’t overly keen on large cashouts above 80% LVR these days. If you’re going above 80% you’ll most likely need to have evidence of what that $200k is being used for.

    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 MattMatt
    Participant
    @proculeius
    Join Date: 2017
    Post Count: 12

    Hi Jamie!

    I guess this is the issue with the real estate industry, everyone has their own views. Brokers, agents and vendors.

    A few things changed since I started this thread, I had a big 4 player turn down my application for the original plan, then a smaller financier wanted to approve with interest only and a higher variable rate.

    With all this mixed information I did my due diligence and got different advice. I withdrew the idea of the big equity release and invested in my education and joined a mentoring program.

    So now I can make an educated and confident decision for the next 1 or 2 IPs. Best decision I’ve made in a while!

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