using equity

hi guys

i have a question about accessing the equity i will have when my house is built

iv worked it out to be around $40,000

house valued and around $300,000 and having a $230,000 loan

only being able to use up to 90% of the value of the house, that works out to be about $40,000 euity correct?

now, im not sure that i will want to access it, as i want to see what interest rates do, and if i move people into my house making things easier etc. but id like to explore the option

my brother has lost his license, so i am thinking of selling my car now, using his car for 6 months, using the money from my car towards the house, furniture, driveway, fencing, garden etc.

then using equity, not much, around 10-15 grand to buy a new car when it is time to give my bothers car back to him

my reasoning for this is my car needs upgrading anyway, i will get more money for my car now than in 6 - 9 months, i will save money on rego/insurance and being a v8 petrol. i will have more money for the house (which iv worked out i have enough anyway, but its nice to have more and be safe, as this is my first house and its scary)

is this easy enough to do once house is finished?

the equity just goes onto the existing loan so weekly repayments will be slightly higher?

how much higher per week would it be on current interest rates? not much i am guessing, as it is only around a 7% increase to the existing loan

is there a limit on when i can access equity again after that?

as i would like to buy another property as soon as possible once this house is completed.

any advice, tips, warnings welcome

thanks in advance
 
Once your house is completed apply to your bank to get it revalued for the purposes for accessing equity to use towards another property purchase. If you have sufficient equity available and you meet your lenders serviceability criteria you can go IP shopping.

Yes using your value & loan figures 90% lvr would give you access to $40k to use towards a deposit and purchasing costs.

That would cover a property purchase of $250k at 90% lvr.

Hope this helps.
 
thanks mate, what about using it to purchase a car

do you think the idea of me selling my car now and using equity to buy another later is a good idea, or stupid idea?

i need a decent car for work etc. so it will need to be upgraded eventually, should i keep it until house is complete, then sell my car and use savings to add to the sale price and upgrade car?

my car is advertised for almost what i paid for it 2 years ago, so i am not losing much money if i sell it soon

thanks
 
thanks mate, what about using it to purchase a car

do you think the idea of me selling my car now and using equity to buy another later is a good idea, or stupid idea?

i need a decent car for work etc. so it will need to be upgraded eventually, should i keep it until house is complete, then sell my car and use savings to add to the sale price and upgrade car?

my car is advertised for almost what i paid for it 2 years ago, so i am not losing much money if i sell it soon

thanks

I would never use equity to buy a liability. Only something that appreciates in the future.
 
Not such a bad idea

JD,

Great Thread, I can relate to your situation somewhat. I am building my third property, once completed my LVR will be around 56% and I plan to take out the remaining 24% to invest in a fourth property and go overseas. I think it is okay to buy liabilities using loans held against an investment property so long as you do not over do it. I see this holiday as my reward for many years of investing and it would be nice to have someone else pay for my holiday. If you need a car and you are going to take out a loan it's always better to use your home loan as you will get cheaper insurance as there is no finance on it and you will also get a better interest rate.
 
tax on equity

Well, I also have a question regarding the tax on equity.

Understood that the tax or CGT will only be calculated once selling the IP. However how to calculate?

For example, bought a IP around 300K, then after few years, apply for the equity around 40K, then after some years sell the IP around 400K. So the tax will be the base of (400K + 40K -300K - other expense and cost), right?

Will it be different between the usage of equity, i.e. using equity to buy IP or PPOR?
 
any more comments guys?

i really want to buy an IP as soon as possible so is this a bad way about going about things, given i need to upgrade my car at some stage

if i kept my shitty car things would be easier, but i just cant show up to clients houses with an old crappy car and it is unreliable

any advice appreciated
 
if i kept my shitty car things would be easier, but i just cant show up to clients houses with an old crappy car and it is unreliable

The reliability is an issue. What sort of car do you have?

Other than that, park it around the corner. I'm not convinced your car is actually that bad - because if it is, it's probably worthless and whether you sell it now or in six months time isn't actually going to make any difference.

Perhaps instead you're a 23 year old bloke that would like to have a 23 year old bloke's car? As a 23-year-old bloke who spent $13,000 on a car 15 months ago that I'd probably get about $5,500 for if I tried to sell it now, I'd advise against it.

Cheers
Greg
 
my car is advertised for almost what i paid for it 2 years ago, so i am not losing much money if i sell it soon
The used car market is really tough right now, possibly because of the 50% Tax Rebate allowed for businesses buying new vehicles. It has both flooded the market and reduced the number of buyers of used cars.

I would suggest to you that all an advertised price proves to you what they aren't selling for, not what they are selling for......

Gools
 
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