Financing 2nd Investment

[molly1a]

Some advice on finance
Daughter has 1 property worth about $340k with a loan of $250K the property rents for $410 per week . She has saved $35,000 cash and wants to buy 2nd Investment how would you suggest to finance . Should she use her cash or ??????
Thanks in advance

 

[Propertunity]

In general terms I am a fan of using OPM, not my own cash. If your daughter wants to, there is only $20K of equity she can access in her current property if she refinances to 80% LVR only and not pay LMI. She will therefore have to at least use some of her cash for the next purchase.

 

[Rolf Latham]

Some advice on finance
Daughter has 1 property worth about $340k with a loan of $250K the property rents for $410 per week . She has saved $35,000 cash and wants to buy 2nd Investment how would you suggest to finance . Should she use her cash or ??????
Thanks in advance

Hi Molly

Much depends on how high the Loan to Value ratio was on the first purchase.

if she paid LMI them ,it may be very cost effective to grab a new loan on the old IP to 90 % lvr and use that as a deposit.

The cash she holds is often best reserved for later non deductible use ( ie PPOR, car, holidays etc) and can usually be parked in an Interest only Offset account if that works

ta


rolf

 

[Jamie M]

Hi Molly

Much depends on how high the Loan to Value ratio was on the first purchase.

if she paid LMI them ,it may be very cost effective to grab a new loan on the old IP to 90 % lvr and use that as a deposit.

The cash she holds is often best reserved for later non deductible use ( ie PPOR, car, holidays etc) and can usually be parked in an Interest only Offset account if that works

ta


rolf

Totally agree. That $35k placed in an offset account is also a good form of risk management IMO.

Cheers

Jamie

 

[--(< PJ >)--]

Some advice on finance
Daughter has 1 property worth about $340k with a loan of $250K the property rents for $410 per week . She has saved $35,000 cash and wants to buy 2nd Investment how would you suggest to finance . Should she use her cash or ??????
Thanks in advance

I have no advice, but just wanted to write a quick note to wish her well. She is already in an excellent position at a great time to buy! Your post is very uplifting to see.

 

[33drifter]

there is only $20K of equity she can access in her current property.

can you please run us through the maths on that

 

[Aaron_C]

80% of 340k is 272k. She owes 250k so she only has an extra 22k to get out of the property.

 

[devank]

Can't she pay the loan with 35K and then get an investment loan of (22+35) 57K?
I know it is a bit risky but if she is young and has nice parents to fall back then why not??

 

[Rolf Latham]

Can't she pay the loan with 35K and then get an investment loan of (22+35) 57K?
I know it is a bit risky but if she is young and has nice parents to fall back then why not??

why invest tax paid cash ?

WHat you are saying would make sense if her place was a PPOR, but not so obvious if an IP ?

ta

rolf