Can I purchase using a properties own equity?

Discussion in 'Property Finance' started by eeho, 15th May, 2012.

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  1. eeho

    eeho Member

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    Hello everyone,

    This may be a silly question but I thought that if anyone would know it would be you guys *don't slam me!*.

    I currently have 2 IPs, house and lands, negatively geared, low CG but I'm thinking positive that they will do well once the estates are completed (3-5 years).

    I've been given the opportunity to buy a family member's house for well below market value (for 185k compared to market value of 220k). It is in a regional centre on a very large block and my plan is to do a small cosmetic reno (painting, new kitchen cupboard doors etc) to add a bit more equity, rent it out for a few years and then knock it down to build units (the property next door has done this on a smaller block with no problems, so council approval should be no problem) once my other IPs start making more money.

    I've got a good income that could service the loan but I'm hesitant to cross-collateralise my other IPs if possible. I've got a small cash deposit (approx 10k) but I was wondering whether it is possible to use the property's own equity to buy it?

    Help please!

    Erin.
     
  2. Rolf Latham

    Rolf Latham Member

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    Hi Erin

    It would be "easy" to set up so that the property you are looking to buy is a standalone from your own

    If its truly a favourable sale and the valuer agrees, you may get away with nil or little deposit

    Worst case youd pull a small equity loan from one of your other places.

    Providing the income is there and you arent tied up in eladtic with your existing lender, its "simple ".

    ta
    rolf
     
  3. eeho

    eeho Member

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    Thank you Rolf!

    Are you aware of a term for what I am trying to do that I can bring to the bank?

    Cheers,
    Erin
     
  4. Rolf Latham

    Rolf Latham Member

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    Favourable sale

    I'd recommend getting a valuation done that the lender will accept before u approach the lender.

    That way u can pick and choose your lender,

    Ta
    rolf

    Ta

    Rolf
     
  5. wobbycarly

    wobbycarly Carpe domus

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    Or give Rolf a call and ask him to do it for you. ;)