Opinions required

Hi,
Need some opionons, advise etc....
We live in a house with market value approx $650. We have a mortgage of $260.
Equity is approx. $390.

we want to invest in a number of properties but seem to be hitting brick walls in securing loans.

Question: Would we be better off selling this property and buy something worth $390 and have no or little mortgage thus enabling us to secure a larger loan for investments?

or

Continue statying in the current home with the $260 debt and settle for ony 1 investment property?

Am I making sense ?

Cheers.
 
Do you have any financial issues that make you unattractive to lenders? Bad debt, employment status, etc?

Perhaps you could get a line of credit against your PPOR and use that as a deposit against an IP.
 
I'm surprised you're having trouble getting finance with that much equity, but there may be some factor I'm unaware of. You may also be with a gunshy bank that isn't really comfortable with people buying more than one or two IPs.

I am not a fan of brokers (sorry to the brokers here) but they can be useful when financing is a problem. They'll know which lenders will consider your combination of circumstances. We had trouble getting finance way back when because it was a regional postcode, and a broker knew which ones would look at the postcode. That sort of thing. That way, you won't waste time, and get queries on your credit report, going for loans that were doomed from the start.

Certainly you could sell the PPOR, and good on you for thinking outside the square. It is tax free money. But I would spend some time with a broker first.
 
An owner occupied mortgage is definitely a limiting factor when it comes to borrowing money, it all affects your servicing.

As an example, if you owe $500K on your own mortgage, that comes with no financial benefit, but if you owe $500K on an investment property that comes with a rental income, so it doesn't limit you as much.

To put it another way if you owe $500K on your mortgage, it costs you $25K in interest. If you owe $1M on an investment property it costs you $50K interest minus $35K net rent, so it only costs you $15K in the banks eyes. So a $500K owner occupied debt affects your servicing more than a $1M investment debt.

If you were to sell your OO house, buy a cheap one with no or a little mortgage, you will be able to buy more investment properties. It's a personal decision for you if that's a good idea.
 
It seems from your post that you are trying to finance multiple properties from the outset, as you refer to loans.

Why not start with one, and then proceed from there?

As for your PPOR, I believe in quality of life, so it all depends on how much your present home means to you and your family. If you sell and rebuy you are up for substantial costs, as well as the upheaval of a move. Financial considerations are only one aspect of this decision.
Marg
 
Maybe you are trying to structure it incorrectly.

What have you proposed to the bank that has been knocked back?

Let us know, that way other forumites can better help you on how to move forward.
It may be as simple as asking in a different way as you seem to have enough equity to get started.
 
Hiya


Correct structuring, and using the right lenders at the right time of your investing career can make a big difference to the end result, IF you intend to buy many a property

I suspect though Tams question is more along the lines of a general financial question on the basis of , should we dump the 260 k non ded debt by selling the PPOR and buying a cheaoer one outright,and the regeating against that.

Dunno all the soft data, but in general having no personal debt is usually preferable, but..........that may not be your ideal overall situation

ta
rolf
 
I can't imagine why you would sell your house. Prices are moving the right way.

Find out from a Borker what the issue could be and work around it.

Others were right too, it's not just about building wealth, but enjoying life while you do. If you don't enjoy the journey you will end up resenting it.

I have been investing for many years now and have recommend you take time to smell the roses while building long term wealth.

Maybe you could reduce your LVR to get it through.
 
Another way to look at this is as follows ... think of the equity in your family home as wall paper made up of your hard earned cash.

To leverage that cash (if you are having servicing problems) you would need to rent out rooms within your home ... not very palatable

Other alternative is sell your home to an investor on a 5 year lease at fair market rental ( you could even find someone to take a f year fixed rental) ... then they can pay all those pesky rates, taxes, insurance and repairs and you simply rent and enjoy the same home ... who says you need to move out?

But what do I do with all that wallpaper you ask? Simple ... stick it on the walls of 4 investment properties ... fill them with tenants and enjoy the benefits of wealth through property
 
Hi,
Need some opionons, advise etc....
We live in a house with market value approx $650. We have a mortgage of $260.
Equity is approx. $390.

we want to invest in a number of properties but seem to be hitting brick walls in securing loans.

Question: Would we be better off selling this property and buy something worth $390 and have no or little mortgage thus enabling us to secure a larger loan for investments?

or

Continue statying in the current home with the $260 debt and settle for ony 1 investment property?

Am I making sense ?

Cheers.

The old saying of "a journey of a thousand miles begins with a single step" comes to my mind here.

Maybe start with just buying one for now, with good yields, good depreciation component and good cap growth prospects.

The Banks will be more accommodating if you are not too leveraged and the DSR is good.
 
Hi,
Need some opionons, advise etc....
We live in a house with market value approx $650. We have a mortgage of $260.
Equity is approx. $390....

Don't want to be a technical Teddy, but usable equity at say 80% LVR based on a value of $650k is actually $260k, not $390k.

$650,000 x 80% LVR = $520,000 - $260,000 = $260,000
 
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