Reason for refinance

[rabidz]

I'm planning to refinance my mortgage, to get a top-up (due to an increase in my equity in the last 12 months). The purpose is to use the top-up money to buy another IP.

The lender will ask me what the top-up money is going to be used for..
What is the best reason I can give to the lender? If I say to purchase another IP, will they reject to give me the top-up (considering my serviceabilty is pretty tight)? Otherwise what is the best reason to tell the lender? Should I lie or honest?

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[Aaron_C]

Depends on who the lender is an if LMI is involved.

 

[rabidz]

Depends on who the lender is an if LMI is involved.

LVR is 80% max.. Thanks..

 

[Jamie M]

Most lenders will simply take "for future property investment" as a suitable purpose and not have to provide additional evidence.

Some lenders will make you jump through hoops and will ask you how much you're spending on the next property so they can see if you can service the end debt with them.

All in all though, 80% cash outs rarely cause dramas.

Cheers

Jamie

 

[Terry_w]

I'm planning to refinance my mortgage, to get a top-up (due to an increase in my equity in the last 12 months). The purpose is to use the top-up money to buy another IP.

The lender will ask me what the top-up money is going to be used for..
What is the best reason I can give to the lender? If I say to purchase another IP, will they reject to give me the top-up (considering my serviceabilty is pretty tight)? Otherwise what is the best reason to tell the lender? Should I lie or honest?

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lie = fraud = up to 5 years imprisionment

 

[jonmardell]

I'm planning to refinance my mortgage, to get a top-up (due to an increase in my equity in the last 12 months). The purpose is to use the top-up money to buy another IP.

The lender will ask me what the top-up money is going to be used for..
What is the best reason I can give to the lender? If I say to purchase another IP, will they reject to give me the top-up (considering my serviceabilty is pretty tight)? Otherwise what is the best reason to tell the lender? Should I lie or honest?

--

It is going to come down to the lenders cash out policy. If the topup is within their cash out policy then you can just say future investment.

 

[Marty McDonald]

lie = fraud = up to 5 years imprisionment

You can always change your mind on the final purchase price though. People are prone top do that.

 

[Corey Batt]

All comes down to the lender policy. Most don't have an issue at your LVR, but best to speak to your broker/a broker if you don't have one to see where you stand.

 

[Aaron_C]

LVR is 80% max.. Thanks..

Then for most lenders it's easy

 

[Redom]

Quite easy to do at 80% without many questions asked.

Risk with 'future investment purpose' as a reason is that some do ask for calculations of next investment property (loan amount and rent) and check your future servicing. But even then, they generally wont need proof and lenders wont try to control what you do with the funds.

As others have pointed, different lenders view cash outs differently. 80% most are ok.

Ta,
Red

 

[Jamie M]

Risk with 'future investment purpose' as a reason is that some do ask for calculations of next investment property (loan amount and rent) and check your future servicing.

It's easy to mitigate though - just need to know which lenders expect what.

Cheers

Jamie

 

[Redom]

It's easy to mitigate though - just need to know which lenders expect what.

Cheers

Jamie

Yeah definitely, its a non issue and easily controlled for at that LVR.

But a risk worthy of consideration given the OP's qn.

Red