How do you best squeeze out money for the next purchase?

If your borrowing capacity was around $400K and you wanted to buy a $500K property which of the following options would be preferable?

1. Borrow the entire amount from one lender bring the LVR on the purchase property IP to 80%
or
2. Increase borrowings on an existing loan to 80% drawing out $100K and borrow another $300K from 2nd lender. 2nd lender would then have security over the purchased property with an LVR of 60%

In both cases money is available to cover 20% deposit and costs.

Just wondering if it is better to maximize borrowings on existing loans where possible.
 
1. Borrow the entire amount from one lender bring the LVR on the purchase property IP to 80%
This keeps the accounting simple.
Wishlist said:
2. Increase borrowings on an existing loan to 80% drawing out $100K and borrow another $300K from 2nd lender.
This complicates the accounting - having to apportion the interest on $100K of the existing loan to the other IP - and doesn't allow you to borrow any more. I can't see any advantages of this approach.
 
This keeps the accounting simple.

This complicates the accounting - having to apportion the interest on $100K of the existing loan to the other IP - and doesn't allow you to borrow any more. I can't see any advantages of this approach.

I'm thinking that it will be easier to squeeze money from an existing lender now in this lower interest environment before a new loan is created. Then I can deal with the new (and more flexible) lender for increases when and if needed in the future.

Keeping accounting simple would be ideal but it's something that can be dealt with.
 
Im usually of the opinion that you borrow when you dont need it, for when u do need the extra, it may be hard for whatever reason.

Assumes of course you can do at no additional cost

ta
rolf
 
As Rolf mentioned I would take the most you need know as tomorrow is another day.

Remember with an interest rate increase anticpated Wednesday it is likely the affordability rate will also increase menaing you actually can borrow less next week than this week.
 
Im usually of the opinion that you borrow when you dont need it, for when u do need the extra, it may be hard for whatever reason.

Assumes of course you can do at no additional cost

ta
rolf

I understand from this comment that you'd see it as preferable to go with option 2 ie maximize borrowings from lender 1 first before borrowing from the 2nd lender even though the total borrowings would still come in at $400K.

I can't see any advantages of this approach... Ozperp

One advantage of option 2 would also be a lower interest rate with lender 1 because of the increased borrowings.
 
This day and age you should be able to negotiate a better rate comparable with the first lender.

Good suggestion and one I will try to implement when the time comes. Thanks.

The advantage of lending through two lenders as I see it would be that increasing lending through Lender 1 would put me into a bracket where lending amounts entitled me to a lower interest rate on not only the $100K borrowed, but to the entire loan.

Having an amount of either $300K or $400K with Lender 2 may not change the package rate or discounted rate I would get with them unless I am able to negotiate a better result as was suggested.

What advantages would there be to keeping the entire loan amount with the same lender?

At the moment it would seem that simpler accounting, and possible greater bargaining power could be an advantage.
 
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