confused about loan structure for investing...

[Notaxez]

G'day,

we are pulling our hair out trying to understand what is the best method for setting up your loans when trying to increase your property portfolio. i have read numerous of the threads and am just getting more confused.

we want ot purchase our 2nd IP and our banker suggests using the available equity in our PPOR (55k) set up an investment loan to use as a deposit on the next place (hence avoiding LMI). or we just increase the loan for the IP and incur LMI....

also confused about setting up LOC, seems like alot of people do this and works well if you are budget conscious (which i think we are).

Can you seasoned investors let us know how you set up your loans please?????

thanks

 

[tobe]

Refinance to the maximum lvr you are comfortable. Set up a second loan for investment purposes with this top up money, and use it as the deposit on the new purchase. have both this top up loan and the new purchase loan interest only, and have seperate banks, or stand alone loans rather than xcoll the two properties with the one lender. Dont use your own cash! put this in your o/o loan and finance the purchase. Get a second opinion from another banker or broker, but dont go with the bank that offers a discount if they take the whole lot xcoll, no discount is worth the pain down the track of having a bundle of xcoll properties with the same lender.

 

[josko]

Hi there,

To add to tobe, an offset or LOC works to your advantage. The wages that you earn can be placed into such an account and can "offset" against your mortgage and therefore reduce the interest that is charged.

As tobe mentions:

1. Interest Only.
2. Stand alone loans (No X-coll)
3. Offset or LOC

Regards JO

 

[wobbycarly]

Refinance to the maximum lvr you are comfortable. Set up a second loan for investment purposes with this top up money, and use it as the deposit on the new purchase. have both this top up loan and the new purchase loan interest only, and have seperate banks, or stand alone loans rather than xcoll the two properties with the one lender. Dont use your own cash! put this in your o/o loan and finance the purchase. Get a second opinion from another banker or broker, but dont go with the bank that offers a discount if they take the whole lot xcoll, no discount is worth the pain down the track of having a bundle of xcoll properties with the same lender.

I second that! If you can avoid it, do!