Implications if I try to get a second IP?

[Rezix]

Hey,

As a nab employee, I am able to access 90% borrowing on residential properties at 6.92% (variable).

I therefore bought a 30sqm inner-city studio as an investment property, around 2 years ago.

The purchase price was $307k, so I was able to borrow $275,477 on interest only repayments for 5 years.

Based on similar apartment sales in the building, I would estimate that my studio has now increased in value to around the $340k mark, meaning I currently have approximately 81% LVR.

I think nab's policy has changed so that they would only lend me a max of 70% due to the apartment size now if I refinanced my existing mortgage, so my question is - What would happen if I applied for a new mortgage for another investment property? Would they ignore the lending I currently have in place & allow me to borrow 90% of the new property (assuming 50sqm+)? Or would they only allow me to borrow a total of 90% of the new property & 70% of my existing property total?

Any input would be appreciated here, since if I can't get enough overall leverage it really isn't worthwhile looking at a 2nd property at this point.

 

[Mick C]

Hi,

Firstly that rate is offered to ALL customer- it's the standard discounted rate/wp --- so nothing special

As a NAB employee you should be entitled to 90% LVR no LMI + No w/p fee- well that's what i been writing for a lot of NAB employee.

Secondlly, u dont need to cross your property- just make the 2nd Ip purchase and as long as it's over 50sq and not a specialized property and not in inner city they will lend up to 95%- they do NOT look at your current apartment when determining LVR's UNLESS they are crossing.

Ur current apartment is considered as specialized property; so i would highly recommend you keep it separate and not to cross- as it's REALLLLY hard to uncross when the time comes.

Regards
Michael

 

[Rezix]

Thanks Mike, that helps a lot. Sorry, I thought I mentioned that it was 90% borrowing "without paying LMI" but must have missed that in my OP.

So the only part of my existing mortgage that would be factored in to my new loan app would be the repayments in terms of serviceability.

Are the online calculators accurate when determining how much you can borrow based on income? How much can someone with no dependents & low-medium expenses, on a ~$70k income usually borrow?

 

[Mick C]

Thanks Mike, that helps a lot. Sorry, I thought I mentioned that it was 90% borrowing "without paying LMI" but must have missed that in my OP.

So the only part of my existing mortgage that would be factored in to my new loan app would be the repayments in terms of serviceability.

Are the online calculators accurate when determining how much you can borrow based on income? How much can someone with no dependents & low-medium expenses, on a ~$70k income usually borrow?

Yes they will look at serviceability and debt levels.

Online calculators - is out of date + it';s not the same cal used by brokers or the bank's credit manager- so use it as a GUILD only ( as it doesn't take in negative gearing benefits etc)


Regards
Michael

 

[Kinnon Bell]

With all due respect Rezix, as a nab employee wouldn't you be best of speaking to one of the bankers there - whether it be a banking advisor in the branch or personal direct over the phone?

In saying that though, does the loan have to be through nab? Just because you're an employee doesn't mean you have to have everything with them.

 

[Rolf Latham]

With all due respect Rezix, as a nab employee wouldn't you be best of speaking to one of the bankers there - whether it be a banking advisor in the branch or personal direct over the phone?

In saying that though, does the loan have to be through nab? Just because you're an employee doesn't mean you have to have everything with them.

That 90 % no lmi is a good thing though ! WBC do it too

ta
rolf

 

[Rezix]

Thanks again Mick.

Kesse - I don't really care who my finance is through, just what leaves me in the best position at the end of the day.

However, as Rolf highlighted, the fact that I can borrow 90% without paying LMI makes it pretty much a no-brainer that nab would be my best bet (especially when you add on the fact that the loans come with an offset account instead of redraw, nab employees pay no loan app fees and we automatically get the full choice package discount without having to pay the choice package fee).

In general, though, do most banks waive the 70% LVR maximum for refinancing a <50sqm inner-city studio that is your PPOR? I was also thinking about claiming I was planning to move back into the studio in order to access an extra 10% of equity for further investment...

 

[Aaron_C]

Thanks again Mick.

Kesse - I don't really care who my finance is through, just what leaves me in the best position at the end of the day.

However, as Rolf highlighted, the fact that I can borrow 90% without paying LMI makes it pretty much a no-brainer that nab would be my best bet (especially when you add on the fact that the loans come with an offset account instead of redraw, nab employees pay no loan app fees and we automatically get the full choice package discount without having to pay the choice package fee).

In general, though, do most banks waive the 70% LVR maximum for refinancing a <50sqm inner-city studio that is your PPOR? I was also thinking about claiming I was planning to move back into the studio in order to access an extra 10% of equity for further investment...

Do not touch the studio....no one will ever give you 90% LVR on it so consider yourself blessed.

 

[Mick C]

Yep since 2007- Studio's and smaller apartment is a no go-er with a lot of lenders and in term of LMI - no chance.

As i said leave your studio as it is...you probably find you won't be able to draw any equity out of it as well.

Just buy your 2nd Ip as it is- straight purchase...that's one of the dis-advantage of smaller units-- good yeild, but can not capalisze on any capital growth ( if any) + can't leverage the property

Regards
Michael

 

[Peter_Tersteeg]

In general, though, do most banks waive the 70% LVR maximum for refinancing a <50sqm inner-city studio that is your PPOR? I was also thinking about claiming I was planning to move back into the studio in order to access an extra 10% of equity for further investment...

From 40sqm to 50sqm a few lenders have become more flexible in their borrowing and will go to 80% but the options are limited.

Below 40sqm it can be done, but there aren't many options at all.

With regards to online calculators, don't rely on them. They're usualy not even remotely accurate and tend to be overly generous. They're more a marketing tool than anything else.

 

[Aaron_C]

Correct. Even with NAB they won't lend more than 70% on a normal sized 2 bedroom apartment in the Melbourne CBD. Policy changes all the time so just be patient. The only way you can unlock equity in a studio is to sell it....

 

[Melbournian]

rule of thumb - stick to 80sqm and above.

 

[Mick C]

rule of thumb - stick to 80sqm and above.

Wow 80 is big- especially for VIC lol

50-60+ is fine...as long as it's not a student accommodation/hotel etc- that be a different story all together


Regards
Michael

 

[Rezix]

Well lesson learnt on the studio then I guess.

Thanks for all the info...

I guess I'll hang on to the studio indefinitely and not refinance the loan (since the studio gives me a good yield) and just buy my next property that is 50sqm+ independently of my existing mortgage then.

Considering buying another 1brm in the same building, but it is inner city (2000 postcode) so not sure if I could get 90% LMI free LVR even if it was 50sqm+... Just finding it exxtremely difficult to find a positively geared property that doesnt have "student accommodation" or "serviced apartment" zoning requirements or a locked in contract for short-term rental... This building ticks all of these boxes so I can't see why 1 52sqm 1brm in it wouldn't be a good buy if I can get 90% LMI-free borrowing on it despite its inner-city locale...

 

[BuildingBlocks]

Think outside of the Sydney metro.