BrizzaParticipant@brizzaJoin Date: 2003Post Count: 75
Is it possible to use equity in my first house as a deposit for another IP?
1st 1P: 285k value, 132k owing, leaving 153k equity. Currently rents out at $250 per week.
I want to buy a 2nd IP at about 600k and have no deposit. I earn about 77k per year and about $150 untaxable income per week.
Is it possible?Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Yes certainly is and how most investors go about it.
Trick is however to avoid cross collateralising your loans.
Normally you would draw upto 80% of the value of the first up and use this as deposit for number 2 but just running your numbers you are going to be well over 90% lvr inclusive of stamp duty and that is likely in the current climate without paying a premium on the rate and LMI.
Might have to go to between 85-90% on IP 1 and try and reduce the Lvr on IP 2 thus reducing the LMI.
Probably of matter of your broker working backwards and see what you need to come up with and then what is available.
Yours in Finance