Due to our unexpected change of circumstance and the sheer pain of trying to get a bridging lo-doc loan to build, I'm seriously considering downgrading to a cheaper but bigger house - and they certainly do exist, as there are lots of towns near here that are a lot cheaper than the one I am currently in - which just happens to be one of the most expensive here so it is actually doable to downgrade from a small 3br to a large 4br if we are willing to move again.
But how does the finance work? Do you need to apply for a full new loan or can you just do that 'security exchange' on the settlement days of both (assuming it is possible to get a sale and purchase to settle on the same day) and pocket any excess funds from settlement? Or does the bank take the change and make your loan smaller?
The price ranges I'm looking at are:
Current PPoR, worth around $180k, owing $80k. Secured by two properties, the other is the one I just rented out.
Looking at new PPoR around $130k mark, be nice to move the $80k loan to this one rather than getting a new, smaller one.
LVR of the new one needs to stay at 60%, although we have quite a bit of equity in the other two properties.
So basically looking at a $50k difference in downgrading, which if we get that back in cash sans selling fees I can then use to build on our land, which could put us in the rather nice situation of having a mere $60k debt on a $250k new build - can anyone say positive gearing?
But how does the finance work? Do you need to apply for a full new loan or can you just do that 'security exchange' on the settlement days of both (assuming it is possible to get a sale and purchase to settle on the same day) and pocket any excess funds from settlement? Or does the bank take the change and make your loan smaller?
The price ranges I'm looking at are:
Current PPoR, worth around $180k, owing $80k. Secured by two properties, the other is the one I just rented out.
Looking at new PPoR around $130k mark, be nice to move the $80k loan to this one rather than getting a new, smaller one.
LVR of the new one needs to stay at 60%, although we have quite a bit of equity in the other two properties.
So basically looking at a $50k difference in downgrading, which if we get that back in cash sans selling fees I can then use to build on our land, which could put us in the rather nice situation of having a mere $60k debt on a $250k new build - can anyone say positive gearing?