Leveraging through equity

[orcades]

Hi there,

We have 3 rental properties with 2 different lenders. We would like to purchase a fourth property in the near future borrowing 100% of the purchase price plus costs. We have quite a bit of equity in one of our properties but wish to get finance through a different lender for our new investment.

Is it possible to borrow against the equity in a property as a leveraging tool held with one lender when you are seeking finance through a different lender? Or is there a way to borrow 100% of the purchase price plus costs without using other properties as security?

Thanks!

 

[Peter_Tersteeg]

Hi orcades,

Your basic plan is sound. Top up the loan on an existing property to access the equity as cash. This (hopefully) will give you enough for an appropriate cash deposit and purchase costs.

By doing this, you avoid cross collateralisation. It also gives you far more flexibility in your choice of lenders.

Get started on the top up now, so you're not in a rush to do everything at once.

You can borrow 100% using a property held by another lender via a second mortgage. Practically it's messy and it could give you a lot of grief both now and in the future.

 

[orcades]

Orcades

Great—thanks Peter. It is something more for us to consider.

All the best,

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