All Topics / Finance / How to use equity

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  • Profile photo of zbar98kazbar98ka
    Participant
    @zbar98ka
    Join Date: 2022
    Post Count: 0

    Hi Guys, I just found this forum and have a beginners question for you.

    If your PPOR has a large amount of equity in it and you were looking at buying a new investment property that is selling for less than what your house is. Does the equity in your property only cover the 20% deposit required for the new place or will the bank allow the equity to be used as a larger deposit therefore reducing the mortgage required for the new investment property?

    Thanks in advance.

    Dean

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Dean,

    There are plenty of folk on here who could perhaps answer you better than I, but here’s a few thoughts anyway….

    1.  That equity (if your situation allows you to borrow it – DSR, etc) can be all used on one property, or perhaps provide deposit and costs for more than one.  Your borrowing capabilities would be the limit on what you might be able to do.

    2.  Give some thought too, to whether you would go IO (Interest Only) on the loans or P&I (paying off both Principal and Interest).  There are other ways to research that might steer you to “the best way for you”  e.g. check out Offset Accounts.   Talk to your financier/broker about these “best ways”, or come back here to ask for more.

    3.   Do you have a goal in mind re your investing?   i.e. Do you plan to accumulate several IO’s over time?   If so, then take a look at structuring to see which way is best for you (e.g. borrow under a Trust, a Company, or in Personal Name).

    4.   Really, there is SO much that needs to be answered.   Have a read around, check out the Training Centre (see the Home Page) and read up on some of the useful information that is within this site.   I’ll be sending you a PM shortly – check out the links within it – especially the “big Picture” topic.

    Not too many answers for you – perhaps more questions that might lead you to think from other angles.   :)

    Benny

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

    Hi Dean

    Welcome to the forum and i hope you enjoy your time with us.

    Many other considerations other than just the deposit split but yes subject to the lender you would be able to access > 20% from the equity in your own home. Apart from structure and maximising the interest deductions you also need to think about whether this purchase is a one off or subject to income whether you intend to create a portfolio.

    A good investment orientated broker could certainly give you some lending options in order to maximise your $$,

    I can certainly send you link to a article i wrote for the API Magazine some years back now on how i structured my portfolio when i started acuiring my first few properties.

    Cheers

     

    Yours in Finance

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

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of zbar98kazbar98ka
    Participant
    @zbar98ka
    Join Date: 2022
    Post Count: 0

    Hi Richard,

    Thanks for your reply and advice. This forum is certainly giving me some more things to think about when I finally sit down with my financial planner to discuss my options going forward.

    That would be great if you could send the link to the article that you wrote, I look forward to reading about your story.

    Cheers,

    Dean

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

    Hi Dean

    Just remember unless your Financial Planner is licensed he cannot provide you with Credit Advice,

    Shoot me an email and I can reply with the article in PDF format.

    Cheers

     

    Yours in Finance

     

     

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

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

Viewing 5 posts - 1 through 5 (of 5 total)

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