Ignoring personal debt / LOC against IP

[Kath Russell]

Please help me get my head straight..............I can't stop thinking about it.

We've refinanced and for the second time today, I spoke to the same WPac guy who told me I'll be able to still pull additional equity up to 85% of the property val against the "IP" debt portion . It also has a LOC / personal debt against it that already takes us up to 85%. (did I explain that right?...it's late).

eg - He's telling me the house is worth say $100, IP debt is $50 so he reckons I could still get another $35 - taking us up to 85%. But, we already have $35 in personal debt.

Did he just tell me I can up my loans to 105% ?

I'm certain this guy doesn't know what he's talking about (like a couple other things we discussed).

Please tell me he's wrong. If he's not, I'll be signing up our next property tomrrow!

1am! must sleep........late............stop reading all the forum ...............addict.............

 

[Rolf Latham]

Hiya Kath

For a start, the 85 % no lmi deal they had a while ago is dead and buried.

If you could provide some actual numbers in terms of properties and values we could be of more help.

The HFM may know what they are on about.............but we cant really tell.

ta
rolf

 

[LoanFinder]

Providing the $35K personal debt is unsecured, then it is not part of the LVR calculations.

If the HFM can provide 85% no LMI, then he is talking about the debt secured against the property only.

You can have unsecured debt on top of this provided youhave the income to support it.

 

[Perp]

Did he just tell me I can up my loans to 105% ?

I've wondered the same thing, Kath. The policy of looking at business and personal debt entirely separately really only works when you haven't got one's debt secured against the other's assets.

I understand exactly what you're saying, but obviously this is not Westpac's intention with regard to their policy of separating private and business issues. The idea is, I assume, that servicability and LVR calculations for your private affairs are based only on your private income and expenses, assets and liabilities.

But commonsense tells me that their must be a proviso in there somewhere, given that security can cross this boundary, that they must do a check of overall LVR of each asset somewhere along the line, and won't let you go to 105% LVR on a particular asset. (Though I confess I may be "misoverestimating" the Bank.)

 

[Perp]

Providing the $35K personal debt is unsecured, then it is not part of the LVR calculations.

I'm pretty sure it's secured, and the WPac guy's "a little misguided".

 

[Kath Russell]

I couldn't help but feel prematurely excited about the prospect I might have over $250K available as we speak to go out & find another property!!! My financial example above was just as an example with a hundred dollars.

Without even looking, I'm sure it's secured. Could I have that adjusted as we can cover the LOC with income. Anyone done that before?

$700K+ Approx house val at the mo
$328K IP debt ($400pw rent, $13K depreciation this yr then approx $10K for 5yrs)
$200K LOC (mostly tied up - ASX, etc)

We've had legal advice to put our property investing on hold until we finalise court issues with our tenant. House is in our personal names. They're suing us if you haven't seen my thread elsewhere. Worst case scenario of course. We're fully insured. A positive out of all this though is we've learnt alot about structures, tenants & I have plenty of time for research on my hands.

Just spoke to WBC and the guy I spoke to is a little more than misguided, according to a very discrete fellow workmate. Kept the new guy's details for future reference......I contact our MB for every transaction we've ever had for his advice, he informs & educates me, then I make informed decisions so I'm in the loop & involved every step of the way. I've learnt so much doing things this way. Apart from selling when we should have held. Anyway....

Cheers

 

[Spectre]

Eventually the 105% would get picked up, probably sooner than down the line.