I am about to call my broker and run this scenario, thought I would get some advice here to ensure I'm as informed as I can be prior to calling.

We are looking to purchase a PPoR (in NSW) ~650-700k and plan on using an IP for the deposit.

IP Val $250k
Loan $130k
Equity @90% $95k

This IP works nicely to cover costs on the purchase at a 90% lend.
Currently this loan is with MyRate, we are unhappy with their service and my understanding is they don't deal with brokers as they have their own internal brokers.

To this end we are looking to refinance this loan and release the equity for a deposit with my broker. My question is what is the best way to do this? If we just refinance at 90% then tax wise things are a nightmare. Do we establish a loan and a LOC? Will many lenders do a LOC to 90%? Will the (smallish) size of the loan be problematic? Anything else we should be aware of?


Have you paid LMI with MyRate already? If you have the credits you have paid won't be transfered to the new lender.
Yes some LMI was paid.

I realise that we will have to pay this again. The MyRate "broker" is so painful that we think it is probably just worth it to pay a few fees and move on. He keeps trying to cross it with our PPoR purchase (I made a post about how he kept saying there an no disadvantages to this, sigh).
This loan is with my partner only and he only wants to speak with her, she is even less informed about finance issues. We had a conference call and he was painful as a person and a broker.
He wasn't getting back to us in a timely fashion when talking/emailing about getting the PPoR financed with someone else.

If we do as suggested does the money just sit in the second loan until we draw it? The loan is already established etc so don't need to apply etc again.

We haven't confirmed the property we want but don't want to have problems getting a deposit out.

Thank you again for your prompt replies
If we do as suggested does the money just sit in the second loan until we draw it? The loan is already established etc so don't need to apply etc again.

Yep - if set up correctly, the majority of the equity release funds should sit dormant until used (you'll pay a small amount on the LMI, etc that you've been charged).

Not all lenders will do a cashout at 90% on a refinance. Most will - but they have quirky expectations. Some will want a preapproval application for the next purchase to accompany the equity release application. Some won't release the funds until you can prove you've had an offer accepted on your next property. Some will just require a stat dec (ANZ for instance are pretty good with 90% cashout refi's)


j_p he is right there is no disadvantedge to the lender is Xrossing the securities only to you the borrowers.

It is so often the way you save a few cents on the rate (at the moment) but end up costing you $$$ when it comes to wanting things done in a timely manner and getting changes made to your loan to enable you to grow your portfolio.

An equity release to 90% is doable with a lot of lenders albeit insurable so keep it to say 88.5% to save yourself a few more pennies.