Is it harder to get finance using equity ?
- Thread starter random
- Start date
Equity is better to use than cash if the purpose of the funds is for investment as the interest on borrowed funds is tax deductable.
Better to preserve cash in an offset (linked to a PPOR if you have one, if not an IP) and or use it to pay down non deductable debt if required.
Better to preserve cash in an offset (linked to a PPOR if you have one, if not an IP) and or use it to pay down non deductable debt if required.
Gee , thanks guys , you've just made my day.
Thanks to Aaron. We were gonna just sell our own place as my other two, just some cheappo investment blocks look like their sold now too. And because l still have CC debts and it's been a really hard few yrs , l just wanted out and to move , start new .
Thing is , our own place would rent out now 600pm CFP if l kept it and just rented it out instead.
Plus it's got 100k equity in it but if l kept it and finished it of over time that'd move upto 2-300k equity , + the 600 CFP , + it's got a separate side 1/2 an ac that l could build into something too.
So , l'm exhausted right now , had enough of stress but , seems stupid to sell it with all that.
l wouldn't get much cash out of it anyway , probably a lot smarter to keep it on the side , use the equity against the new place, soldier on with this one.
Sure wouldn't regret it later on l guess , it's just l so want out right now.
Thanks to Aaron. We were gonna just sell our own place as my other two, just some cheappo investment blocks look like their sold now too. And because l still have CC debts and it's been a really hard few yrs , l just wanted out and to move , start new .
Thing is , our own place would rent out now 600pm CFP if l kept it and just rented it out instead.
Plus it's got 100k equity in it but if l kept it and finished it of over time that'd move upto 2-300k equity , + the 600 CFP , + it's got a separate side 1/2 an ac that l could build into something too.
So , l'm exhausted right now , had enough of stress but , seems stupid to sell it with all that.
l wouldn't get much cash out of it anyway , probably a lot smarter to keep it on the side , use the equity against the new place, soldier on with this one.
Sure wouldn't regret it later on l guess , it's just l so want out right now.
Yes. If you convert your new PPOR to an IP in the future then you have preserved the principal loan amount for max tax deductions.
Also you are controlling the cash flow to your advantage by making IO payments saving the difference in your new PPOR offset account to use as you see fit and/or required.
Yep, subject to serviceability.
HIya
I have a different experience
Getting a hold of equity can be tough with some lenders................
Cash out is a dirty word with some, especially where LMI is involved.
Im not saying its insurmountable, im saying its not as simple as its made out to be and needs to be carefully considered, especially in the context of a structured finance approach.
ta
rolf
I have a different experience
Getting a hold of equity can be tough with some lenders................
Cash out is a dirty word with some, especially where LMI is involved.
Im not saying its insurmountable, im saying its not as simple as its made out to be and needs to be carefully considered, especially in the context of a structured finance approach.
ta
rolf
You can keep it all IO.
Neeko - I think you should get some professional advice on your current setup. Without sounding rude - you seem a a tad confused so perhaps best to leave this aspect to a professional while you worry about finding properties to buy
Cheers
Jamie
Yeah this is one of my things , gonna mean a much bigger mortgage in my new place. That should be made up plus some if the old place is rented out consistently and more again if doing something with the side 1/2 ac making some money out of that to works out.
l'd have a bigger mortgage , plus the old one and to have to look after it too if not though. That'd be hard to carry it with the new bigger mortgage ,
It is in a rural area, what if the old place is vacant for long periods or my 1/2 ac idea doesn't work out . Spose we could always finish it of then sell l guess , plan b
Cash is always preferred and is king! - but end of the day cahs and equity is the same from the lenders point of view BUT the only reason i say cash is king;
-With equity you need to "BORROW" and apply for a loan for this too be available....sayfor example oyu have reached your max exposure or serviceability with your current lender and wanted to buy a new place with another lender - You would need to refinance which is fine but if LMI is involved then that's where it get expensive.
- Takes time to organize a equity loan VS cash
- Equity depends on banks valuation.
- Equity also depends on banks cash out policy ( presuming oyu need acces too some of the cash beforehand)
^ Way around this is too tap into the equity NOW; and have it as "equity ready" rather then wait till you found your place.
-With equity you need to "BORROW" and apply for a loan for this too be available....sayfor example oyu have reached your max exposure or serviceability with your current lender and wanted to buy a new place with another lender - You would need to refinance which is fine but if LMI is involved then that's where it get expensive.
- Takes time to organize a equity loan VS cash
- Equity depends on banks valuation.
- Equity also depends on banks cash out policy ( presuming oyu need acces too some of the cash beforehand)
^ Way around this is too tap into the equity NOW; and have it as "equity ready" rather then wait till you found your place.
This is solid advice, I find it's ALWAYS easier to get money when you don't need it...
Take it when you can, leaves more time looking for that right property then stressing over finance
