Loan Structure



From: Anonymous

I would very much appreciate if anyone could give me their thoughts on the way to structure the loans of the purchase of 3 dwellings:
1. A semi detached cottage - $98,000 purchase price - We pay 20% dep + costs.
2. Semi detached cottage - $95,000 purchase price - we pay 20% dep + costs. (tenanted)
3. Semi detached cottage (joined to 2 above) $95,000 purchase price - again 20% dep + costs. (vacant)

We have 3 existing IPs:
a) 1 with a P&I loan with a Redraw facility
b) 1 with a P&I loan
c) 1 with a LOC

The semis 2&3 need renovating, one is vacant so we plan to do that one straight away using funds in the existing LOC or Redraw then perhaps revaluating to gain access to extra equity.

It seems we are required to put in the 20% deposit + costs due to:
a) Property 1 above is in a flood zone (though has not had water in the house), but it should be more protected now due to the construction of new town levy banks.
b) We have a low income and don't fit into the banks usual criteria, (but we have enough equity).

It is better to have a separate loan for each property?

If so, would you suggest we have fixed Interest loans for 1 & 2 and a LOC for 3 (the cottage we intend to renovate) so we can draw on the increased equity.

Any thoughts would be greatly appreciated as I'm really not sure which is the best way to go.

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Reply: 1
From: Steve Navra

Hi Jane,

The cashbond structure will easily fit this scenario.

Refer to the archives for detail.

As you have written as anonymous, I can't send you the info, so if you wish to you can e-mail me and I will gladly send same to you.


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