Looking to buy 2nd home, 1st home loan locked. Help.

Hi Guys,

My family and I are looking to buy another home, as current home is way to small now.

I already have one house with a loan that is locked in until dec 2012 with Commonwealth Bank.
Pay out fee is $7500.

Equity is about $50,000 in 1st home.

I rang the comm bank and they said they can give us a LOC account but will only give us 80%LVR of home 1. That is only $10,000.

Home number 2 is looking to be about $380k to $400k purchase price.

They will lend me 90% (or 95%) if I use home 2 as a security (xcol). Which means I only need to come up with $6k they said + stamp duty.

I have no current real savings, but can come up with about $10k cash. So looking to use as much equity as I can.

What is the most financially efficient way here.

I plan to put both these house's on interest only loans and rent them out in the future.

I hope I am making sense with all of this, I have contacted a mort. broker in the past and they were no help.

My question is, how bad is it to cross collateralise these two homes if I plan to use them both as investments in the next 5 years.

Hi Daniel

Its obvious from what you are saying that the bank is not acting in your best interest.

There is Usually no godd reason why you cant get 90 % on stand alone deals with Comm, the cross is for them to purely stitch u up further.

By having the loans crossed the LMI premium is likely to be biggers as well

Give them an earful and ask them present a workable stand alone structure, or simply get an independent broker to structure it with Comm for you .

IO is ok for both

Cant wait for the new NCCP legislation which may prevent some of this behaviour by lenders
And Daniel, I can highly recommend Rolf if you're looking for a different broker. He is very experienced and knows his stuff 100%
Thanks Rolf for the info. I never like dealing with the bank for that reason Rolf, they're never really on your side.

Jacque - Thanks for the ref.

Rolf, I shall be in contact.