Beginner question, regarding finance!

How do you do that? Do I contact the bank?
Do they come inside or do a drive by or just sit behind a computer and crunch numbers?

When you apply for a loan, the lender will perform some sort of valuation as part of their process. Often it's a simple drive-by or they'll run an automated 'desktop valuation'. Given you're looking at 90% or higher, the bank will likely want a valuer to inspect the property inside and out.

This is part of the application process. You only need to allow the valuer access to the property if they contact you and request it.

Was taking out a 95% loan a bad idea? My justification was it meant I had ready access to my cash and with it in an offset it kept my monthly repayments to about the same anyway... Also as its part of the loan does that mean its a deductible part of the debt?

95% in itself isn't bad, but there is a point where the benefit becomes fairly small when compared to the costs. As Brady suggests, it's unlikely to be a big deal when the loan amounts are reasonably small.

There are however scenarios where going from a 90% + LMI lend vs going to a 95% including LMI lend becomes expensive. I've literally seen figures on $500k+ loans where for every $1000 extra you borrow, you give $700 straight back in LMI premiums. It's fine if that's what it takes to execute the strategy and get the deals done, but for me it's a bitter pill to swallow.
 
Ok, good to know I haven't shot myself in the foot.
So I just spoke to my CBA lender just to see what he said, as I have a feeling my best interests aren't his primary concern. He said that having two loans is messy and complicated and I should just use the property I'm in as insurance for the loan. When I mentioned about x-coll he said it won't effect me as if I got into financial trouble they would ask me to sell both homes anyway.
So my question is: is x-coll only bad if you get into trouble? Or are there other negatives?
 
Ok, good to know I haven't shot myself in the foot.
So I just spoke to my CBA lender just to see what he said, as I have a feeling my best interests aren't his primary concern. He said that having two loans is messy and complicated and I should just use the property I'm in as insurance for the loan. When I mentioned about x-coll he said it won't effect me as if I got into financial trouble they would ask me to sell both homes anyway.
So my question is: is x-coll only bad if you get into trouble? Or are there other negatives?

xcoll is only bad if you get into trouble. so thats ok, no wait, how do you know you wont get into trouble?

WIth your earlier comments about girlfriends, seperate, and possible future shared purchases, Id suggest strongly to keep them seperate.

There no downside for you, its a bit of hassle for the lender/data entry.

Id also suggest avoiding that particular banker from here on in.
 
I'd just like to jump in and say well done. I think you're on a good solid path investing early in life. And good on you for asking questions.
 
Ok good to know! Yeah definitely time for a change!

Also!! Im planning on putting air con into the place I'm I'm now and some BIRs, I had planned on paying with my cash, but now I'm opened up to this drawing more finance world, would it be more beneficial to increase loan for renos? I've already spent 5k on some... Was that a waste of hard earned cash?

Should I even bother with the renos??


Edit: thanks Jaspn! This forum has helped a tonne!
 
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He said that having two loans is messy and complicated and I should just use the property I'm in as insurance for the loan. When I mentioned about x-coll he said it won't effect me as if I got into financial trouble they would ask me to sell both homes anyway.
So my question is: is x-coll only bad if you get into trouble? Or are there other negatives?


useful advice for no one really.

Now you know that you need to find another banker or a broker,mind you many brokers have been trained by banks......... and will offer the same "maximum contribution" solution

here is a little old post, most still valid and there are a few more reasons why not to go the xcoll way in most scenarios. Xcoll does have uses, but not in normal every day stuff.

http://somersoft.com/forums/showpost.php?p=120656&postcount=6

ta
rolf
 
hard to say. I would suggest talking to a managing agent, and seeing what the return on the renos might be. So does air con increase the rent? By how much? Then do your numbers on whether its worthwhile.
 
Ok, good to know I haven't shot myself in the foot.
So I just spoke to my CBA lender just to see what he said, as I have a feeling my best interests aren't his primary concern. He said that having two loans is messy and complicated and I should just use the property I'm in as insurance for the loan. When I mentioned about x-coll he said it won't effect me as if I got into financial trouble they would ask me to sell both homes anyway.
So my question is: is x-coll only bad if you get into trouble? Or are there other negatives?

No the lender is wrong x-Coll is also bad when you don't get into trouble.

First of all financially it will cost you more, as the lenders mortgage insurance will be higher.

Also what about when you want to access more equity and one property has gone up in value say $30k and the other has gone down $30k, because the loans are crossed you have no useable equity.
Similar senario if you go to sell a property, if they are crosses then the bank will won't valuations on both. I have seen banks stop sales of properties due to low vals which could of been avoided if no x-Coll.

I suggest you speak with a better banker or broker
 
Ok so time for a new broker!

Another thing I'm confused about is, once I purchase the IP and get tenants in it, I'll have a separate loan for it. Do I then organize a 'access' account linked to this loan which all related in goings and out goings use? So then at the EOFY it's easy to tally expenses?
 
Ok so time for a new broker!

Another thing I'm confused about is, once I purchase the IP and get tenants in it, I'll have a separate loan for it. Do I then organize a 'access' account linked to this loan which all related in goings and out goings use? So then at the EOFY it's easy to tally expenses?

Better to have all rents etc paid into a 100% offset account attached to your home loan as this would save you more non deductible interest.
 
Better to have all rents etc paid into a 100% offset account attached to your home loan as this would save you more non deductible interest.

Where do the IP loan repayments come out of then??
Or are you saying, have an offset account attached to IP?
 
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IP payments would come out the offset. This should be attached to a PPOR loan rather than an investment loan as you will save tax.

Doesn't that then make it hard to keep track of what expenses were for what property? For example, I get a HWS in the IP and fix some holes in a wall, when it comes to tax time how do you figure out what expenses were for which property?
 
Doesn't that then make it hard to keep track of what expenses were for what property? For example, I get a HWS in the IP and fix some holes in a wall, when it comes to tax time how do you figure out what expenses were for which property?

Easy, you keep a list of expenses! Set up an excel spreadsheet and track expenses as you go along.
 
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