Valuation after Renovations

We have nearly completed renovating our PPOR and soon to be IP. So should we go to the bank where we are financed and ask them to do a full valuation inspection? They only did a computer valuation when we got finance. So if they valuate it to be say for example 10k more than what they originally valuated it for then would we get 10k in equity? Would this 10k go into our offset account or how does it work? Would we have less to pay then on the mortgage etc (IO payments)?
 
Hiya Rachel

Almost always ur fist stop should be be your existing lender for a val and a top up so to speak.

if the result isnt waht u want, then look at options

Im making some *** umptions here, but usually youd want your IP equity loan to be separate to the home loan.........

ta
rolf
 
Hiya Rachel

Almost always ur fist stop should be be your existing lender for a val and a top up so to speak.

if the result isnt waht u want, then look at options

Im making some *** umptions here, but usually youd want your IP equity loan to be separate to the home loan.........

ta
rolf

I think the loans are separate but we will be living with some relations for awhile so this will become an IP so we will have two IP's.

My questions were sort of overlooked though and we have moved in another direction, thanks anyway.
 
So if they valuate it to be say for example 10k more than what they originally valuated it for then would we get 10k in equity? Would this 10k go into our offset account or how does it work? Would we have less to pay then on the mortgage etc (IO payments)?

I didn't know there was a word as "valuate" :)

No - if the valuation came in at $10k higher, then you can access whatever LVR they let you have - most likely 80% (i.e. $8k in this example) without going to LMI etc.

Yes, you can get them to put it in an offset, leave it in the loan as a LOC etc etc

Cheers,

The Y-man
 
I didn't know there was a word as "valuate" :)

No - if the valuation came in at $10k higher, then you can access whatever LVR they let you have - most likely 80% (i.e. $8k in this example) without going to LMI etc.

Yes, you can get them to put it in an offset, leave it in the loan as a LOC etc etc

Cheers,

The Y-man

I see, that sounds great then so it does seem to be worthwhile getting the valuation done as soon as possible.

Thanks everyone!
 
Another thing I wanted to ask is if we don't plan on buying another property at the moment then is there any reason to have the equity available? We will be buying other properties later, maybe in a few months though. So I guess I could put the equity money into our offset account anyway as they would bring the interest down, is that correct?
 
Another thing I wanted to ask is if we don't plan on buying another property at the moment then is there any reason to have the equity available? We will be buying other properties later, maybe in a few months though. So I guess I could put the equity money into our offset account anyway as they would bring the interest down, is that correct?

Get it out sooner rather than later.
Banks are restricting their policies more and more.
Last week, I settled a re-finance loan with Westpac. This week, they have rejected my application for another re-finance loan due to an internal policy change.
If I'd lodged the application earlier, I might have been approved.
If you can draw down some equity and park it an offset account, then go for it, I would suggest.
If you wait, you might not have that option.
 
Get it out sooner rather than later.
Banks are restricting their policies more and more.
Last week, I settled a re-finance loan with Westpac. This week, they have rejected my application for another re-finance loan due to an internal policy change.
If I'd lodged the application earlier, I might have been approved.
If you can draw down some equity and park it an offset account, then go for it, I would suggest.
If you wait, you might not have that option.

thanks for the advice and confirming it is possible to transfer equity into an offset account. I will try to get it done soon then.
 
We have nearly completed renovating our PPOR and soon to be IP. So should we go to the bank where we are financed and ask them to do a full valuation inspection? They only did a computer valuation when we got finance. So if they valuate it to be say for example 10k more than what they originally valuated it for then would we get 10k in equity? Would this 10k go into our offset account or how does it work? Would we have less to pay then on the mortgage etc (IO payments)?

Hi Rachels,

Can I ask why you are quickly turning it into an IP after you do the reno. If the property was already an IP prior to any work being done, all the works could be claimed as a tax deduction (as it would have been spent on an income producing asset).

Any reason why you decided to do this first? Could possibly be easie while living in it?? even though some would go against this view.

Cheers.

F
 
Hi Rachels,

Can I ask why you are quickly turning it into an IP after you do the reno. If the property was already an IP prior to any work being done, all the works could be claimed as a tax deduction (as it would have been spent on an income producing asset).

Any reason why you decided to do this first? Could possibly be easie while living in it?? even though some would go against this view.

Cheers.

F
We had no choice as it is our current PPOR and our other place is tenanted. We also wanted to reno it while we lived in it as we had the time. I realize we could have got tax deductions if we renovated it when it was an IP but it needed work done right away as it was rundown. Maybe we can claim deductions now once we turn it into an IP, I don't know? We are going to travel for awhile so it will be an IP and when we come back we hope to buy a new place to reno so I guess it's a catch 22 situation as we will then be living in the new place as well... :confused:
 
Hi Rachels,

Can I ask why you are quickly turning it into an IP after you do the reno. If the property was already an IP prior to any work being done, all the works could be claimed as a tax deduction (as it would have been spent on an income producing asset).
F


Renovations aren't tax deductible.

You can claim repairs if they are restoring the property to the condition it was in before the tenants damaged it.

At best you can claim the 2 1/2 % building depreciation, which you can claim whether the renovations were done as an IP or PPOR.
Marg
 
Renovations aren't tax deductible.

You can claim repairs if they are restoring the property to the condition it was in before the tenants damaged it.

True, thanks for correcting me

marg4000 said:
At best you can claim the 2 1/2 % building depreciation, which you can claim whether the renovations were done as an IP or PPOR.
Marg

if you were doing most of the works yourself, I am under the assumption that you can also claim all the plant required to do it (provided that the cost of each item is under $600). i.e. sanders, compressors paint brushes / rollers, karchers, saws, laser levels, etc, etc. This would be for the purpose of using it on a number of properties....not just one property.

Cheers,

F
 
Renovations aren't tax deductible.

You can claim repairs if they are restoring the property to the condition it was in before the tenants damaged it.

At best you can claim the 2 1/2 % building depreciation, which you can claim whether the renovations were done as an IP or PPOR.
Marg

The building is very old so I doubt we can get depreciation. I think it was built in early 60's. I'm surprised renovations are not tax deductible, thanks for the info. What about if we use the property to run a home business, could we claim on renovations for that although it will be rented out soon anyway!

True, thanks for correcting me

if you were doing most of the works yourself, I am under the assumption that you can also claim all the plant required to do it (provided that the cost of each item is under $600). i.e. sanders, compressors paint brushes / rollers, karchers, saws, laser levels, etc, etc. This would be for the purpose of using it on a number of properties....not just one property.

Cheers,

F
Yes most of the work we have done ourselves and many of the costs were for buying equipment like sanders & all the other things you mention etc as this was our first project. These will also be used on future properties we renovate as well.

So I guess we will discuss all this when we talk to our accountant after July.
 
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Actually I have to say that most of you are all wrong or the bank manager I spoke to is wrong or more likely I have misunderstood something?

I went to the bank a couple of days ago and asked them about getting the house reevaluated so I can have the equity go into my offset account. They said that you can only get the place reevaluated if you want a new loan as it costs them money and they said there is no point. I explained to them that some experts I know ;) said I can etc.

They explained a lot of things and told me there is no reason. They do specialize in loans this person I spoke to so I would gather they have some understanding.

So I'm quite confused now as I re read this thread and it seems I should be able to get the cash to go into my offset account from equity even if I don't plan to buy another property at the moment?
 
Rachels, I bought a property a while ago with a $200k loan for a $250k property. I did a reno and asked the bank to reval a few months later with a view to extracting the equity I'd created.
The valuation came in at $320k, so I ended up with $56k in my offset account.
From my point of view, it was an extension on the existing loan. From the banks point of view, they internally did a re-finance as they paid out the $200k loan and replaced it with a $256k loan. Same result for me.
At no point did they tell me it couldn't be done or that there was no point.
Sounds like you need to talk to another bank, of the person you have spoken to is the best they have to offer.
Better still, hook up with a savvy broker. They don't deal with the guys at the counter, but people who actually know what they are talking about.
 
Hi rachels,

Comments inline.

Actually I have to say that most of you are all wrong or the bank manager I spoke to is wrong or more likely I have misunderstood something?

The bank manager is wrong.

I went to the bank a couple of days ago and asked them about getting the house reevaluated
It's revalued (or reval'd). You want to get your house revalued. Not reevaluated. :D

...so I can have the equity go into my offset account. They said that you can only get the place reevaluated if you want a new loan as it costs them money and they said there is no point.
In the property game, you're going to hit brick walls with lots of things. These things are opinions. It's their opinion that it's not worth it.

"It costs them money" - big whoop! The way I see it, is that the bank can pay for a meezly valuation (probably costs them $200), or I will move my business to another bank. Simple.

I explained to them that some experts I know ;) said I can etc.
Information is power. When you know a lot, then you can use this to your advantage. :)

They explained a lot of things and told me there is no reason. They do specialize in loans this person I spoke to so I would gather they have some understanding.
You weren't specific for the reason to do the reval. Instead of "I just want money in my offset account", say: "I want to create a buffer" or "I want to fund the deposit for another investment property".

Good luck!

-- MJ.
 
Wow, and I nearly believed them and was not going to bother but I'm quite surprised they were that wrong.

Now I wonder if it will be worth me trying to get the loan refinanced as Rob touched on? The reason is that we only just a few months ago got our mortgage for this property moved over from our other bank to refinance an IP. So we got a package with the new bank and now they have the PPOR & the IP although they are separate loans, not cross collateral. So we had to pay exit fees etc for the move and now if we get a refinance then I guess we would have to pay exit fees again even if we use the same bank! But maybe we should talk to another bank and see if they would revalue the PPOR (soon to be IP).
Say: "I want to create a buffer" or "I want to fund the deposit for another investment property".
Can someone explain more about the buffer, I think it would be better if I have a better understanding before I go back. As for another property, I don't plan to buy one at the moment and I don't have enough money anyway but I might be able to in a couple of months.
 
Can someone explain more about the buffer, I think it would be better if I have a better understanding before I go back. As for another property, I don't plan to buy one at the moment and I don't have enough money anyway but I might be able to in a couple of months.

You could tell them you want some cash as a buffer in the even that interest rates rise and you want to have some cash behind you to cover the rate rises, or you want a cash buffer for future renovation projects.
They are bound to ask.
Buying a new ski boat or bigger plasma are not good answers to the question.
 
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