Just need to pick the brains of a few experts on an issue I have
At the moment I have the following:
Unit 1 (currently residing) Value $600 Mort $340
Unit 2 (investment) Value $135 Mort $135
Saving available $65k
I now want to buy a house for $550 for my expanding family without selling Unit 1 as I think it has good long term prospects. When it is rented out it is about $150 per month CF +
Unit 2 is close to CF+
I used equity in Unit 1 to buy unit 2 which is why the mort is so high.
So as far as my deposit goes:
*Should I use the equity available from Unit 1 (approx $113k as I need to keep LVR under 80% across the portfolio).
PROS
-This would save me over $18k in LMI.
-More cash retained
CONS
-This would also make my new PPOR securitised against another property. This is something I have been warned to be cautious of.
-It also reduces equity if I want to buy another IP.
-It means I have a bigger mort as I am not using any cash
OR
*Should I use only the available cash as a deposit
PROS
-No securitisation between PPOR & IPs
-Lower mortgage as I have put in more of my own cash
-Leaves more equity available from Unit 1 for future IP purchases
CONS
-Mortgage goes up by $20k to cover LMI.
-Less cash retained
I am also keen to hear other structures that could be used any theoretical errors I am making.
I have made sure there is a buffer of $10k left over for any problems (property or other).
So what do you guys think? I am going to see an accountant anyway but would be keen to hear peoples thoughts on the scenario.
Thx
Nick
At the moment I have the following:
Unit 1 (currently residing) Value $600 Mort $340
Unit 2 (investment) Value $135 Mort $135
Saving available $65k
I now want to buy a house for $550 for my expanding family without selling Unit 1 as I think it has good long term prospects. When it is rented out it is about $150 per month CF +
Unit 2 is close to CF+
I used equity in Unit 1 to buy unit 2 which is why the mort is so high.
So as far as my deposit goes:
*Should I use the equity available from Unit 1 (approx $113k as I need to keep LVR under 80% across the portfolio).
PROS
-This would save me over $18k in LMI.
-More cash retained
CONS
-This would also make my new PPOR securitised against another property. This is something I have been warned to be cautious of.
-It also reduces equity if I want to buy another IP.
-It means I have a bigger mort as I am not using any cash
OR
*Should I use only the available cash as a deposit
PROS
-No securitisation between PPOR & IPs
-Lower mortgage as I have put in more of my own cash
-Leaves more equity available from Unit 1 for future IP purchases
CONS
-Mortgage goes up by $20k to cover LMI.
-Less cash retained
I am also keen to hear other structures that could be used any theoretical errors I am making.
I have made sure there is a buffer of $10k left over for any problems (property or other).
So what do you guys think? I am going to see an accountant anyway but would be keen to hear peoples thoughts on the scenario.
Thx
Nick