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From: Mike .
The second step is the hardest???
From: Bill
Date: 06 Sep 2000
Time: 12:03:25
Hi everyone
Firstly, well done to everyone for their ongoing contributions. I think this forum is brilliant and is a great way to share learnings so we can all achieve our goals! Now to a bit of an issue I would appreciate some advice on.
I’m looking to make the second step to expand our portfolio however am a bit confused as to my best options. Here goes with the details. We have 1 IP, secured by itself as well as a second mortgage over our home. I want to buy an additional property but am not sure as to my best options in terms of loan arrangements, minimising collateral, etc. I’ve done the rounds of the banks and am no clearer.
Here are the facts: One IP valued at $210, with $180 IO mortgage. Home value of $250 with $176 mortgage (not fully drawn, with $15 “up the sleeve”). As such assets of $460, loans of $356; LV of 77%. If we want to buy another IP, say $250 and borrow the lot with costs, say $270, we would have an asset base of $710, with liability of $626, being 88% LV. We are then hit for mortgage insurance as a start. My biggest concern is not MI. (Having said that, I’d rather not pay it. Does anyone know how much it would be, as I haven’t got a clear idea from brokers & banks I have spoken to? Do you only pay it once on loans?).
Rather, the bigger question is how do I set up No 2 and minimise the collateral? I’d like to have it secured 80% to itself and not as a third mortgage over our home and a second mortgage over IP No 1.
This is the biggest stumbling block I have found with the banks. The "can’t do" attitude is alive and well in the financial sector! Once I start talking these kinds of figures you can see "risk" written all over their face, as it is outside the confines of what they are normally used to dealing with. Affordability is not the key. I can make that part of it work if you follow Jan’s advice on the scenario to present to the banks.
That’s it. I’ve bared my soul!! I’d love to hear and learn from others on how I can best make that next step into no 2…and 3… and …..and……!!
Cheers, Bill
The second step is the hardest???
From: Bill
Date: 06 Sep 2000
Time: 12:03:25
Hi everyone
Firstly, well done to everyone for their ongoing contributions. I think this forum is brilliant and is a great way to share learnings so we can all achieve our goals! Now to a bit of an issue I would appreciate some advice on.
I’m looking to make the second step to expand our portfolio however am a bit confused as to my best options. Here goes with the details. We have 1 IP, secured by itself as well as a second mortgage over our home. I want to buy an additional property but am not sure as to my best options in terms of loan arrangements, minimising collateral, etc. I’ve done the rounds of the banks and am no clearer.
Here are the facts: One IP valued at $210, with $180 IO mortgage. Home value of $250 with $176 mortgage (not fully drawn, with $15 “up the sleeve”). As such assets of $460, loans of $356; LV of 77%. If we want to buy another IP, say $250 and borrow the lot with costs, say $270, we would have an asset base of $710, with liability of $626, being 88% LV. We are then hit for mortgage insurance as a start. My biggest concern is not MI. (Having said that, I’d rather not pay it. Does anyone know how much it would be, as I haven’t got a clear idea from brokers & banks I have spoken to? Do you only pay it once on loans?).
Rather, the bigger question is how do I set up No 2 and minimise the collateral? I’d like to have it secured 80% to itself and not as a third mortgage over our home and a second mortgage over IP No 1.
This is the biggest stumbling block I have found with the banks. The "can’t do" attitude is alive and well in the financial sector! Once I start talking these kinds of figures you can see "risk" written all over their face, as it is outside the confines of what they are normally used to dealing with. Affordability is not the key. I can make that part of it work if you follow Jan’s advice on the scenario to present to the banks.
That’s it. I’ve bared my soul!! I’d love to hear and learn from others on how I can best make that next step into no 2…and 3… and …..and……!!
Cheers, Bill
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