2 properties on the same loan

I took out a loan from equity in a property I have a mortgage with. My original plan was to use this loan for business purposes but now that has fallen through.

I have the loan money just sitting there doing nothing, there is repayments to made however there is no interest charged until I use it, plus I changed it to P&I to buy some time until I decided what to do. It's not like I can give back the loan?

I was thinking to buy a new property with this cash. Does this mean the new property is effectively bought outright and not secured against the original property mortgage?

What are the pros/cons of doing this especially if I would like to loan more in the future should my income increase?

I read ideally you should have separate loans for each property for flexibility but my options are limited at the moment.

On top of this I'm more of a house guy and was looking around lower south east QLD where I am probably only going to be able to afford a unit after all the costs. If I could somehow loan a little more then I would go for house although the benefits of a unit are becoming attractive - less maintenance costs (I would hope) and higher cash flow.

 

That would be a good idea but last time all the brokers failed to get me the loan where as I was able to get it myself. Not saying people on here couldn't.

Partially because my situation is quite unique I found most of them weren't very motivated. I live overseas but I'm not employed as an expat because I'm a dual citizen . On top that the currency I earn in is not friendly and gets reduced to 80% (or less depending on lender) of what I actually earn. ANZ had even come up with a policy against lending to dual citizens and the only reason I mentioned it was because they eventually asked for my expat work visa papers.

I was lucky enough to find a motivated sales guy I guess that probably wanted to push his numbers up and got everything approved by Bankwest The same bank some of the brokers inquired at. Depends who you are talking to I guess.

 

Now that the loan is in place get one of the brokers here to structure it right for you - it won’t need a new application, just a form. No need to change lenders.

If you just go and buy a house with the money you’ll muck up your deductions with a mixed loan.

 

Unit's can be good but I would be avoiding the big apartment buildings as the Body Corporate fees can really reduce your cash flow, I would be looking for smaller buildings (if you haven't already) such as 3 story walk ups (no lifts = lower maintenance costs = lower Body Corporate fees) same goes for pools. Just my 2 cents.

 

How would a broker charge for just a restructure as there is no commission, I guess it's just a service fee, what are the typical rates? Thanks

 

Depending on the bank they may pick up trail on the loan, otherwise they'll do it just because it's good customer service.

 

The loan appears to be secured by a mortgage over the current property. It is enough to pay for another property the other property could be purchased without the need to mortgage it. But a loan has still be used to acquire this property.


Sounds like you do have separate loans.


I would suggest you still borrow 80% against the new property because you will find it hard to get ‘cash out’ in the future.