All Topics / Finance / Use Equity in 1st IP as deposit

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  • Profile photo of BrizzaBrizza
    Participant
    @brizza
    Join Date: 2003
    Post Count: 75

    Hi All,

    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?

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

    Hi Brizza

    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.

    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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