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From: Paul Hickey
Can anyone answer this question for me about property financing?
I have just had my home revalued and I should have access to redrawn funds of around $54,000 if I redraw up to 90% of my home's value. So I plan to go shopping soon for a two bedroom unit in the eastern suburbs of Sydney for, say, $350k.
My existing lender, a bank, will allow me to borrow 100% of the cost of this unit, plus expenses and possibly even renovation costs, as long as the overall loan is secured by both properties. i.e. the securities of the two properties will be linked.
My understanding from various sources is that it is preferable to redraw a 10% deposit from my home loan and go to another lender for my first investment property. This keeps the properties separate in terms of security.
But if I do that, won't I have to fund a 10% deposit ($35k) plus my purchase costs (say $19k). There goes my $54,000 with no money left over for renovation or loan servicing.
How do I go about getting the second lender to loan me 90% of my COMBINED purchase price, purchasing costs and renovation?
i.e. I want to finance the property like this
Purchase price $350,000
Stamp duty, legals, etc $ 19,000
Rejuvenation $ 20,000
TOTAL COSTS $389,000
I provide 10% deposit $ 38,900 leaving me $15,100 to service loans and act as backstop
They loan balance of $350,100
Would a second lender do this? Under what circumstances? Do I only need to ask? Or will it be based on forecasted value of the investment property after the rejuvenation?
P.S. I'm not worried about the money I redraw from my home loan being seen as non-deductible (if that is the case) as my home will soon be rented out too.
Thanks
Paul
Can anyone answer this question for me about property financing?
I have just had my home revalued and I should have access to redrawn funds of around $54,000 if I redraw up to 90% of my home's value. So I plan to go shopping soon for a two bedroom unit in the eastern suburbs of Sydney for, say, $350k.
My existing lender, a bank, will allow me to borrow 100% of the cost of this unit, plus expenses and possibly even renovation costs, as long as the overall loan is secured by both properties. i.e. the securities of the two properties will be linked.
My understanding from various sources is that it is preferable to redraw a 10% deposit from my home loan and go to another lender for my first investment property. This keeps the properties separate in terms of security.
But if I do that, won't I have to fund a 10% deposit ($35k) plus my purchase costs (say $19k). There goes my $54,000 with no money left over for renovation or loan servicing.
How do I go about getting the second lender to loan me 90% of my COMBINED purchase price, purchasing costs and renovation?
i.e. I want to finance the property like this
Purchase price $350,000
Stamp duty, legals, etc $ 19,000
Rejuvenation $ 20,000
TOTAL COSTS $389,000
I provide 10% deposit $ 38,900 leaving me $15,100 to service loans and act as backstop
They loan balance of $350,100
Would a second lender do this? Under what circumstances? Do I only need to ask? Or will it be based on forecasted value of the investment property after the rejuvenation?
P.S. I'm not worried about the money I redraw from my home loan being seen as non-deductible (if that is the case) as my home will soon be rented out too.
Thanks
Paul
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