Where to from here??

[MeganG]

Hi,
I have 4 IP's and have all mortgages with Commbank. They are all crossed, and I have used all my equity, and will not be able to lend any more from Commbank without mortgage insurance, which I want to avoid. What I want to know is - where do I go from here if I want to buy more? I am in a good financial position and could afford to service at least 3 more IP's, but what are my finance options? I am worried that tying up the first 4 with one bank has harmed my options? Will other banks/lending institutions touch me? What are my options to go forward and buy more?

 

[WillG]

Based on what you have told us, you will probably have to refinance (some of your IP's to release equity.

You may be able to do this with your current bank or another bank.

A good mortgage broker will be able to offer ways of doing this.

I am assuming your servicability is OK to borrow more $$'s

If you post some rough numbers you should be able to get more detailed feedback.

Hope this helps, Cheers

 

[MeganG]

Hi Will, Thanks for your reply.
I am worried because I only just refinanced with commbank to get a better interest rate and have locked my loans in at 7.2% for 5 yrs. I wanted the security in knowing what I would be paying out over the next 5 years. I don't know if I am able to refinance now...

Figures that may help
IP no 1 - Value $550k - Mortgage $110k
IP no 2 - Value $340k - Mortgage $280k
IP no 3 - Value $455 - Mortgage $473k (included stamp duty)
IP no 4 - Value $465 - Mortgage $484k (included stamp duty)

I still have about $5k a month for use in servicing any new IP's...

 

[Twitch]

Hi, do you have a PPOR? A share portfolio?

 

[MeganG]

Currently renting - so no PPOR.
No stocks or shares but savings of $100k (rainy day fund )

 

[Twitch]

Hi, I'm not particularly creative with these kind of scenarios, every time I think I've examined every angle of my own financial situation my accountant or mortgage broker will see an option I hadn't thought of.

But I imagine a combo of some or all of these things are the way forward for you to secure more IPs
1) your strong cash flow
2) $100k cash
3) a good mortgage broker
4) high LVR (90%+) loans
5) a small amount of spare equity in your IPs (this is going to be the hardest to exploit I imagine)

good luck

 

[FrankGrimes]

Figures that may help
IP no 1 - Value $550k - Mortgage $110k
IP no 2 - Value $340k - Mortgage $280k
IP no 3 - Value $455 - Mortgage $473k (included stamp duty)
IP no 4 - Value $465 - Mortgage $484k (included stamp duty)

I still have about $5k a month for use in servicing any new IP's...

I would personally pay some mortgage insurance (probably on IP1) to release some extra funds if you can afford the repayments. For the sake of a few grand you could potentially release a decent amount of money.

Then look at use that extra money as a deposit for the next one. I personally think 100k just sitting there is excessive. Make sure you have access to money in a hurry but 100k is alot. Is the 100k sitting in an offset account?

 

[Twitch]

I would personally pay some mortgage insurance (probably on IP1) to release some extra funds if you can afford the repayments. For the sake of a few grand you could potentially release a decent amount of money.

Then look at use that extra money as a deposit for the next one. I personally think 100k just sitting there is excessive. Make sure you have access to money in a hurry but 100k is alot. Is the 100k sitting in an offset account?

Frank, problem is all the loans are secured by all the properties. At least that's how I understand the situation. IP1 can't be released, not without breaking over a million worth of fixed loans all with 5 years to run.

 

[Belu]

what about using some of your cash on a margin loan for share trading? Maybe take $50k of yours and margin it up to $100k to go in with? In terms of your rainy day fund you could use your excess to build this back up while you have the $100k in shares?

 

[Hernan Crespo]

Based on my experience, I think perhaps there are 2 things you should look into.

The first being structures. If you have 4 properties under your personal name or under a single structure, chances are that the banks will get nervous and not lend you money. If you structure things properly, you don't really need to tell the bank that you control all 4 properties, only properties under your personal name (nothing unethical here, that is actually what a bank manager told me to do...he said the IPs under different trust structures not under my personal name was not something he 'wanted to know about')

Secondly, using a mortgage broker or talking to several different banks would probably be a good idea. Look at low docs if full docs cannot do. i think key is to keep talking to banks and brokers and find someone who will support your future growth.

 

[willy1111]

From what I can see your security totals are $1.81M and your borrowings are $1.347M or about 74% LVR.

Based on 80% you should be able to pull out an extra $101K. Perhaps ask your banker or broker if CBA will give you another loan possibly an LOC (or viridian is CBA's pet name for a LOC) up to $101K or 80% of your total security. (they may not due to servicability not sure on your situation). They should be able to create a separate loan which won't effect your fixed borrowings.

You could then take the $101K and use it as a deposit on another IP, get the remaining 80% from another lender to complete the purchase. Or Westpac will allow you to go to 85% in some cases without LMI, which would allow you to purchase another property for around $500K.

 

[Medine]

Hi Megan,

You might find that CBA will baulk at any more lending because their exposure to you is already over $1 million.

One option is leaving your CBA loans as they are and use your cash for deposit and costs, getting a stand alone new loan with another bank. You might need to pay mortgage insurance, depending on purchase price for this property.

Cheers, Medine

 

[FrankGrimes]

Frank, problem is all the loans are secured by all the properties. At least that's how I understand the situation. IP1 can't be released, not without breaking over a million worth of fixed loans all with 5 years to run.

Even if they are x-coll you can still pay LMI and release some money

 

[MeganG]

Thankyou all very much for your advice. It puts it all more into perspective, and you have given me some good ideas.
Cheers