Immediate equity from recent purchase
- Thread starter Acid
- Start date
The bank wants to limit its "exposure" on your property to a certain limit. That's why banks don't lend you 100% of the property value in the first place.
So, there is a maximum percentage for which you'll be able to get finance. This is the LVR - Loan to Valuation ratio.
To gain access to your equity you will usually take out a LOC (Line of Credit), and the total debt against your property will be subject to the LVR. Most people keep their LVR at 80% or less, partly because most banks require Lenders Mortgage Insurance (LMI) to be paid if you exceed 80% LVR. In other words, you must pay an insurance premium to protect the bank if you want them to increase their risk by increasing the LVR (if you can get them to agree to it in the first place).
At 80% LVR, the most you can borrow on a $100K property is $80K. Since you've already got an $80K mortgage, you can't borrow anymore.
If you went to 90% LVR, that permits $90K total borrowings against a $100K property, and since you've only got an $80K mortgage, they might lend you $10K more.
But, either way, the amount in your circumstance is probably not enough to something worthwhile with. You certainly can't get access to your whole 20% deposit.
So, there is a maximum percentage for which you'll be able to get finance. This is the LVR - Loan to Valuation ratio.
To gain access to your equity you will usually take out a LOC (Line of Credit), and the total debt against your property will be subject to the LVR. Most people keep their LVR at 80% or less, partly because most banks require Lenders Mortgage Insurance (LMI) to be paid if you exceed 80% LVR. In other words, you must pay an insurance premium to protect the bank if you want them to increase their risk by increasing the LVR (if you can get them to agree to it in the first place).
At 80% LVR, the most you can borrow on a $100K property is $80K. Since you've already got an $80K mortgage, you can't borrow anymore.
If you went to 90% LVR, that permits $90K total borrowings against a $100K property, and since you've only got an $80K mortgage, they might lend you $10K more.
But, either way, the amount in your circumstance is probably not enough to something worthwhile with. You certainly can't get access to your whole 20% deposit.
Hiya
yes and no :O)
a 95 % top and/or refinance would release 15 % minus costs.
ta
rolf
yes and no :O)
a 95 % top and/or refinance would release 15 % minus costs.
ta
rolf
If it is a dump you can fix it up ( paint etc) a bit and have the property revalued upwards... eg. If you have a $200K property, with $160K finance, spend $10K to fix it up, revalue it at $260K, you can then refinance at 80% of $260K = $208K almost the orginal price of the property plus the cost of improvements. Thus you get your deposit out to do it again....it's been done, it's possible now, people on this forum are doing it!!! Just ask them how!
well I recently purchased my first IP - a unit in Cairns for 71k, rent $140/wk (RE says he can get $150, but not too sure whether to believe him).
I have good inclome but only another 10k in savings, and I want to buy more properties sooner rather than later.
So I guess I'll take a trip up there and see what improvements can be made, and in the meantime will invest the 10k plus monthly savings until I can borrow for another IP.
Or do you think it would be better to pump my cash back into the loan?
I have good inclome but only another 10k in savings, and I want to buy more properties sooner rather than later.
So I guess I'll take a trip up there and see what improvements can be made, and in the meantime will invest the 10k plus monthly savings until I can borrow for another IP.
Or do you think it would be better to pump my cash back into the loan?
