Newb question!!

Our situation.

PPOR, $600k
Owe, $190k
Available equity, $300k

Ready to purchase 1st PI, so off to finance broker.
Our home loan is with the NAB, we told the broker from the start we didnt want our PPOR secured against PI, just use the equity in PPOR as a deposit.
Broker finds us a good deal with St george, pre approval for $400k.
Now today we get a phone call from his secretary saying we need to sign some forms so St george can take over our home loan from the NAB.
We rang the Broker and he explained that St george need to secure our home for the PI, he also said that for the 1st PI you have to use the same lender as for you're PPOR...:eek:



HELP!! This seems to go against everything i've read about PI finance..

Or can someone point me in the direction of threads relating to this subject.

Thanks Jas.
 
Unless you have a deposit saved or can withdraw cash from your PPOR loan then and IP purchase will need to be secured off your PPOR.
 
Our situation.

PPOR, $600k
Owe, $190k
Available equity, $300k

Ready to purchase 1st PI, so off to finance broker.
Our home loan is with the NAB, we told the broker from the start we didnt want our PPOR secured against PI, just use the equity in PPOR as a deposit.
Broker finds us a good deal with St george, pre approval for $400k.
Now today we get a phone call from his secretary saying we need to sign some forms so St george can take over our home loan from the NAB.
We rang the Broker and he explained that St george need to secure our home for the PI, he also said that for the 1st PI you have to use the same lender as for you're PPOR...:eek:



HELP!! This seems to go against everything i've read about PI finance..

Or can someone point me in the direction of threads relating to this subject.

Thanks Jas.

Oh Dear,

Seems as if your MB isn't even on the same page as you or at the very least didn't ensure you understood his recomendations.
Time to look elsewhere or get on the same page at least.


Regards
Steve
 
Was there any discussions of Line of Credit against your PPOR with NAB??

One of the ways to keep the properties separate, a LOC is established against your PPOR, then that is used as a deposit and costs for the IP. The loan for the IP can then be with any lender.

Was anything like this discussed with your MB?? If no, may I suggest you go shopping for another MB. Quite a few good ones on here.

Sunshine
 
Yes i agree with the comments already made.

Sounds like your MB has a case of cross collateralitas which isnt uncommon in inexperienced brokers.

Steve (Bradsdad) is a 3 iron distance away from you there in Geelong why not give him a call and get it set up properly from day 1.
 
Hiya

The main concern I have here isnt the possible xcoll etc, its the way this is put together with no real feedback to the client...............

I third the call that you might want to look at some other options OR educate your MB.

You have oodles of equity, so crossing isnt needed, though your MB may be arguing that if the loans are with the one lender you will get a better rate etc . This is maybe why hes looking to move the NAB loans to St George

ta
rolf
 
Our situation.

PPOR, $600k
Owe, $190k
Available equity, $300k
Well done!
Broker finds us a good deal with St george, pre approval for $400k.
Now today we get a phone call from his secretary saying we need to sign some forms so St george can take over our home loan from the NAB.
We rang the Broker and he explained that St george need to secure our home for the PI, he also said that for the 1st PI you have to use the same lender as for you're PPOR...:eek:
Well done for realising that your MB taking you for a ride!
 
Yes i agree with the comments already made.

Sounds like your MB has a case of cross collateralitas which isnt uncommon in inexperienced brokers.

Steve (Bradsdad) is a 3 iron distance away from you there in Geelong why not give him a call and get it set up properly from day 1.

Thanks! Might just give Steve a call....:D
 
Doesn't $300k in equity equal "withdraw cash from you're PPOR :confused:

Sure, but how do you get at that $300k?

Options are:

1. Re-finance whole deal (what your MB is suggesting)

2. Go to your bank NAB and borrow purchase price + cost - using PPOR and IP as security

3. If you current PPOR mortgage/loan has a redraw facility - withdraw enough to cover deposit and cost, then source loan for IP from different provider for balance

4. Take out a Line of Credit against your PPOR to use as deposit and cost, then source loan for IP from different provider for balance


You need to put something down - you can not simply borrow 106 to 110% without a deposit or some form of security.



I have recently gone through this path having paid off PPOR, I have chosen option 4 as I believe it suited my requirements.
 
Sure, but how do you get at that $300k?

Options are:

1. Re-finance whole deal (what your MB is suggesting)

2. Go to your bank NAB and borrow purchase price + cost - using PPOR and IP as security

3. If you current PPOR mortgage/loan has a redraw facility - withdraw enough to cover deposit and cost, then source loan for IP from different provider for balance

4. Take out a Line of Credit against your PPOR to use as deposit and cost, then source loan for IP from different provider for balance


You need to put something down - you can not simply borrow 106 to 110% without a deposit or some form of security.



I have recently gone through this path having paid off PPOR, I have chosen option 4 as I believe it suited my requirements.

We thought we had an understanding with the MB early on that NO.2(as you have it) was the way we were going to go, and then that call yesterday!!:confused:
The main issue is, that he told us yesterday that we HAVE to use the same lender for the PI as for the PPOR. This is either a lie so he can gain financially, or he has no idea....
 
The main issue is, that he told us yesterday that we HAVE to use the same lender for the PI as for the PPOR. This is either a lie so he can gain financially, or he has no idea....

You do need the same lender for both if you are going to use you PPOR for security.

The only way to use separate lender for the IP is to have access to a deposit + cost or via a LOC secured against your PPOR
 
We thought we had an understanding with the MB early on that NO.2(as you have it) was the way we were going to go, and then that call yesterday!!:confused:
The main issue is, that he told us yesterday that we HAVE to use the same lender for the PI as for the PPOR. This is either a lie so he can gain financially, or he has no idea....

Really needs a bit more in depth info - there's a vague possibility that whatever deal the MB has got with respect to costs etc may only be available when a certain amount of business is with them. It is possible to have 2 loans with the same bank and not x-collateralised. On the other hand, have met a few brokers who have no idea what the difference is, and it is too late once the papaers are signed - so READ carefully.

Cheers,

The Y-man
 
You do need the same lender for both if you are going to use you PPOR for security.

The only way to use separate lender for the IP is to have access to a deposit + cost or via a LOC secured against your PPOR

Hmm...As i said in my 1st post, we did not want our PPOR used as security against PI.

And again... as i said in my 1st post, we wanted to access our equity as a deposit for PI.

Am i missing something?
 
You do need the same lender for both if you are going to use you PPOR for security.

The only way to use separate lender for the IP is to have access to a deposit + cost or via a LOC secured against your PPOR

It doesn't necessarily have to be a LOC. An IO loan (or P & I for that matter) are options also.


Regards
Steve
 
Hmm...As i said in my 1st post, we did not want our PPOR used as security against PI.

And again... as i said in my 1st post, we wanted to access our equity as a deposit for PI.

Just 1 clarificaiton I am needing personally (I may have misunderstood) - when you say $300k Available Equity, what do you mean?

The Y-man
 
Just 1 clarificaiton I am needing personally (I may have misunderstood) - when you say $300k Available Equity, what do you mean?

The Y-man

Isn't available equity based on 80% of value of property??

So if value is 600k
80% of that is 480k
we owe about 180k
So thats 300k.

Is that how its worked out:confused:, lol, or de we have 420k in equity, hehe i'm confused:p

Cheers Jas.
 
Isn't available equity based on 80% of value of property??

So if value is 600k
80% of that is 480k
we owe about 180k
So thats 300k.

Is that how its worked out:confused:, lol, or de we have 420k in equity, hehe i'm confused:p

Cheers Jas.

That's fine - I just wasn't sure what form that equity came in when you said "available" - eg has it got a redraw facility?

The way we did this (and I suspect the way you wanted to do this) is:
1. call up current bank (not broker at this stage).
2. ask for reval/refinance
3. extend loan to 80% (or whatever) of new value
4. have the newly available equity available as redraw or as cash in an offset account (if you have one)
5. then grab MB and say, I have $x available to draw down as a deposit, how much of a loan can I get to buy my next property.
6. buy IP, draw down cash from the first property (usually by transfer over internet to your "every day" account, cash if you're really daring!) to use as "deposit" portion, and MB arranged loan to cover the rest.

Hope this makes sense....

The Y-man
 
Thanks Y man, that does make sense.
Is it compulsory to have a reval/refinance? We will only be wanting enough of a deposit for an approx 300k property, ie 30k or 60k based on 90% lvr or 80% lvr + costs..

Thanks again.
 
Thanks Y man, that does make sense.
Is it compulsory to have a reval/refinance? We will only be wanting enough of a deposit for an approx 300k property, ie 30k or 60k based on 90% lvr or 80% lvr + costs..

Thanks again.


It's the only way we've been able to get at "new equity" - i.e. where prices have risen, or where the principal has been paid back as part of a P&I loan. The only time you don't need to would be if you have made extra repayments that can be redrawn (assuming your account has a redraw facility).

Wouldn't harm you to get the refin done to have the extra cash available for the future anyway (you don't pay interest on it until you withdraw it - so if you only need $30k, you only pay interest on the $30k)

Cheers,

The Y-man
 
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