Converting Prop to IP and fund another Prop

[somer_hut]

Hi All,

Just wanted to make sure the best way forward.

House in blacktown , with near new 2 bedroom GF (self managing rental)
Main House Loan: 340k
Offset Account: 300k

Another linked GF Loan Account:
140k
Granny Flat Offset Account: 2k
current loans are both Interest only and linked to respective offset account

Conservative Valuation: 650k, might even be 700k as thats what similar have sold walking distance to station...

GF rented for 390 per week...
House to rent for atleast 480 per week..
on 670 sqm block.

===============

want to purchase another Prop, around 600-650k in south west sydney...
whats the best way to finance this. just use money in my off set account to organise 20% deposit, stamp duty etc..
then leave remaining balance in offset account for this new prop.


whats I wanted to know is there anyway, to access more equity or money from blacktown house and then carry it forward towards next purchase?

even this next purchase I will be setting at IO loan linked to offset account from day one.... as in future will move from there in 2-4 years...

regards

somerhut

 

[Redom]

Hi All,

Just wanted to make sure the best way forward.

House in blacktown , with near new 2 bedroom GF (self managing rental)
Main House Loan: 340k
Offset Account: 300k

Another linked GF Loan Account:
140k
Granny Flat Offset Account: 2k
current loans are both Interest only and linked to respective offset account

Conservative Valuation: 650k, might even be 700k as thats what similar have sold walking distance to station...

GF rented for 390 per week...
House to rent for atleast 480 per week..
on 670 sqm block.

===============

want to purchase another Prop, around 600-650k in south west sydney...
whats the best way to finance this. just use money in my off set account to organise 20% deposit, stamp duty etc..
then leave remaining balance in offset account for this new prop.


whats I wanted to know is there anyway, to access more equity or money from blacktown house and then carry it forward towards next purchase?

even this next purchase I will be setting at IO loan linked to offset account from day one.... as in future will move from there in 2-4 years...

regards

somerhut

Heya,

Best to use your equity so the new place is full deductible. With a 700k val, you can borrow 560k. Therefore top up your current loan by another 80k (use it in a separate split so u can track it come tax time).

Then use that 80k as your deposit for your next place. You'll probably need to tip some cash in it also to keep your LVR below 80%.

Few finance points worth noting:

1. Use a GF friendly lender. Some don't like it, especially in Sydney.
2. Note that valuations for GF often don't produce results. Its a yield play, not a growth one. Can order a couple vals and valuer shop with appropraite lenders, but just keep this in mind when forming your expectations.

Cheers,
Redom

 

[somer_hut]

Heya,

Best to use your equity so the new place is full deductible. With a 700k val, you can borrow 560k. Therefore top up your current loan by another 80k (use it in a separate split so u can track it come tax time).

Then use that 80k as your deposit for your next place. You'll probably need to tip some cash in it also to keep your LVR below 80%.

Few finance points worth noting:

1. Use a GF friendly lender. Some don't like it, especially in Sydney.
2. Note that valuations for GF often don't produce results. Its a yield play, not a growth one. Can order a couple vals and valuer shop with appropraite lenders, but just keep this in mind when forming your expectations.

Cheers,
Redom

so if we get a valuation of 700k, then we can do an equity release of another 80k, which will sit in separate loan account..

then i can use this 80k towards another PROP purchase....without any tax implications...?

also the GF has been there only 3 months....so is it a bit too soon to look at valuations / equity release?

current lender in NAB...

thanks

somerhut

 

[Terry_w]

It will depend on the situation and how you have set up now.

ideally borrow a 100% of the new PPOR and utilise a new offset to minimise interest. How you do this will depend on your set up.