Best IP loan

From: Jennifer Tan

My partner & I would like to use the equity we have accumulated in our home to buy an investment property (IP). We would like to borrow enough money to cover 100% of the purchase price of the IP plus extra costs like legal fees. However, each bank & mortgage lender we have approached so far will only lend up to 90% of the purchase price, and we therefore have to have at least the 10% deposit.

Does anyone know a financial institution who will lend 100% the purchase price of the IP plus extra expenses???

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Reply: 1
From: Albena B

No worries, ANZ does it. We have purchased our first IP two months ago with 100% of the purchased price plus the bank charges without any deposit. The bank has used equity we have in our home to guarantee the mortgage on the IP. The only money we had to come up was the stamp duty and settlement fees.
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Reply: 1.1
From: Sim' Hampel

This is called cross-collateralisation (ties the two properties together), which gives you effectively the same result as taking out a LOC on the unused equity in your existing house to pay the deposit, except that you get more flexibility if you go the LOC path.

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Reply: 2
From: Rolf Latham

Hi Jennifer

All lenders will do 105 to 110 % lend and beyond if you have sufficient supporting equity.

By doing this though you are offering an unlimited guarantee by providing a second mortgage secured against your home.

Commonly, you are better off to take out a physical loan for deposit and costs against your home, and then take out a separate loan secured only by the IP for the remainder.


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