80% LVR to 90% + 1 IP

I currently have a IP in brisbane which I set up late last year and realize the finance could have been done better, I would now like to purchase another property and would like to take the opportunity to tidy up the first mortgage in the process.

The first one is 80% LVR P&I payments with ING fixed at 4.99 for 5 years.
The plan was buy and hold and sell or use the equity in 5 years, but I've since decided I would prefer to keep investing.

Ideally I would like to get a valuation on the first home, pull it back to 90%, pay the LMI, switch to variable rate interest only with offset and use the equity to fund the deposit of another property.
Willing to pay down the first mortgage and redraw the money to cover all funds needed for the next purchase.

Now I realize that is probably not possible, but how much of this would I be able to do on a fixed rate home loan before having to break free? I would imagine it would not be worth breaking out this early in the contract.
 
You will have loads of break fee, depending on ING you may be able to reval and extract up to 90% in a new split and leave existing intact. But my understanding is that ING is pretty woeful for topups/cashout.
 
ING isn't the best for investor serviceability nor are they easy to increase your existing lending to 90%. ING doesn't allow any extra repayments on fixed rates either. You pay break costs on every dollar.

That said, it is possible to get a valuation done through ING, then based on this result it maybe possible to get and increase to access the equity. By choosing a fixed rate you haven't been disqualified from accessing equity The real problem here is the choice of lender; the fixed rate just makes it expensive to move.

If you're willing to pay the break costs, the best thing would be to move to a different lender and restructure the loans more appropriately. The problem is that the break costs on a 5 year fixed contract can be substantial. Fixed rates have already dropped, to determine how much this will cost you'd have to contact ING.
 
I'd look to leave the current loan as is - and do a top up to 90% with ING and then take out the next loan (the one against the new IP) with another lender. However - you'll need to be able to demonstrate servicing with ING on the entire end debt (which isn't always easy as their method of calculating max borrowing is pretty lousy).

Cheers

Jamie
 
ING ................ urgh :(

ok for set and forget but top ups and post settlement stuff .......... hae patience and it will be ok.

structure wise, what Jamie Pete has suggested is about as good as it gets

ta
rolf
 
As said, staying with ING and doing a top up is best case scenario.

If this isnt possible (servicing/ING wont let it), do your maths on whether you'll return enough from the future IP to repay you the break fee and then some for your risk. If you do take this route, definitely move out from ING and to a more investor friendly lender. If your taking such a large break fee hit, do a couple valuations to make sure you get the most bang for your buck.

Cheers,
Redom
 
Correction Peter you wrote "ING doesn't allow any extra repayments on fixed rates either"

I quote from the current ING Fixed Rate Loan Product Sheet "additional repayments of less than $10,000 in any 1-year period without incurring break costs"

From memory it has always been the case
 
Correction Peter you wrote "ING doesn't allow any extra repayments on fixed rates either"

I quote from the current ING Fixed Rate Loan Product Sheet "additional repayments of less than $10,000 in any 1-year period without incurring break costs"

From memory it has always been the case

I was about to post this too.

In terms of servicing, ING is not the best but your current situation may still allow you to borrow up to 90% on a separate split like previously mentioned.

Taking out a loan from another lender for your IP is a good idea. NAB, for example, will take actual payments instead of an inflated figure (at the assessment rate) for servicing. It also takes into account negative gearing on IP to improve serviceability.
 
Additionally, with ING, you can just get cash out for future investment purposes. Their policy quotes:
"For LVRs above 85%, cash out will be limited to a maximum of 20% of the security value."
 
Additionally, with ING, you can just get cash out for future investment purposes. Their policy quotes:
"For LVRs above 85%, cash out will be limited to a maximum of 20% of the security value."

Yep - they say they do it....but in practice it can be a different story and it's never a fun process :(
 
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