Using Equity

W

WebBoard

Guest
From: Ian Redman


Hi All,

Due to the ever rising prices of property, we believe that we will be able to buy again very soon using equity in our 1st IP.

Could somebody please explain the way to do this?, and also how much equity would we need?.

Example:-

Say we have $15K in equity and we find a house/unit for $130-$150K which is +/ve geared. (rent $170-$200 week).

Do we have enough equity to buy in this price range, covering all legals, borrowing costs etc?. Also is there a time span req'd by the banks before you can refinance?. We bought IP1 in November 2001.

Thanks in Advance

Ian Redman
 
Last edited by a moderator:
Reply: 1
From: Rolf Latham


Hi Ian

You could be close depending on many other things. Certainly if you qualify for the ANZ 97 % lend you could be home free, because this only needs a 5 % deposit and they will lend you the Mortgage Insurance themselves on top of that.

Could we have some detailed numbers please, like value of first one and the loan value.

Ta

Rolf
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 1.1
From: Ian Redman


Hi Rolf,

Thanks for your response. We wanted to find out if it was possible for us to do this before actually going ahead, getting valuations etc.

Because we do not have any savings at the moment! (Taken up in 1st settlement), we only have equity in our IP. We believe that is has appreciated between $10K-$15K, in just under six months. We are hoping to use this money to purchase a property between $130K-$150K and we want to be able to borrow the whole amount.

Is it true that banks will lend you up to 110% provided you have equity in the home?

Will the $10-$15K in equity be enough?, and could we use the whole amount as the deposit?.

Thanks in Advance

Ian Redman
 
Last edited by a moderator:
Reply: 1.2
From: Duncan M


How does one qualify for the ANZ 97% product Rolf?


Regards,

Duncan.
 
Last edited by a moderator:
Reply: 1.2.1
From: Rolf Latham


Hi Duncan


Good serviceability, genuine 5 % savings over 6 months OR equity growth equivalent.

There are restrictions to this produt in terms of location like mainly metro and large regional areas.

Strictly speaking its actually closed to 97.1 for an average size loan, because the loan itself is 95 % + ANZ will tip the LMI premium in on top of that.

They get a bit paranoid about certain areas and rental reliance issues but generally not hard to get if set up the right way.

Ta

Rolf
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 1.2.1.1
From: Ian Redman


Hi Rolf,

We purchased the property for $158K, so we now believe it to be worth $173K-$178K.

If we were to want to go with a different lending institution how does this affect things, i.e. transferring equity etc.?

Thanks

Ian Redman
 
Last edited by a moderator:
Reply: 1.2.1.1.1
From: Rolf Latham


Hi Ian

Thanks for that, and how much is owing on the loan for that property ?

Ta

Rolf
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 1.2.1.1.1.1
From: Ian Redman


Hi Rolf,

We owe approx $148K on the unit. I just spoke to one lender who will only lend to 90%, so I hope you can help. I suspect we need to wait a while longer. If this is the case can you please explain the refinancing case for the example I gave earlier.

Thanks in Advance

Ian Redman
 
Last edited by a moderator:
Reply: 1.2.1.1.1.1.1
From: Rolf Latham


Hi Ian

Lets start form sratch

178 val, refinance to 90 % with exisitng or new Lender. Best to use someone that will capitalise (lend you) the mortgage insurance premium - eg Suncorp, Bankwest

You owe 148, 90 % of 178 = 160k, say 1500 in costs to get out from where you are (hope youre not with most of the non bank lenders cause they charge a little exit fee) and to get into new lender, so 160 000 - 1500 = 158 500 new funds. You will need to pay off the old loan = 158 500 - 148 000 = 10 500 spare funds

New Property 130 k. Seek ANZ loan at 95 %.

Depoit required 6.5 k, costs should be less than 4 k so its very very tight but should be able to be done. Remember ANZ will lend you the LMI premium on TOP of the 95 % loan.

Caveats on the above are obvioulsy the vals, your income and actually qualifying for the loan and the mortgage insurance.

Go for it youre close.

Ta

Rolf
 
Last edited by a moderator:
Top