So I came across couple of websites, one of them was St George where they mentioned upto 90% is equity could be used for IP. Another one was a broker site. Is it a new trend or something? Plus what are pros and cons of going for 90% usable equity with the same bank.
"90% usable equity," is a very ambiguous term. I'll assume it means you can borrow 90% of the value of an existing property and releasing cash, to then contribute to the deposit of another property. The benefit of this is you can borrow an extra 10% against the property value. This might make the difference between being able buy sooner rather than later. There's several downsides. * You'd have to pay LMI. Possibly paying as much as 2% to access another 10% (1 fifth of the extra equity will go straight back to fees). * You'll often pay higher rates for loans above 80%. * You probably won't be able to have an interest only loan. * It's risky. If you have to sell in a hurry, you may not be able to acheive a price that pays out the debt in a fire sale. Generally I'd suggest only leveraging to 80% for an equity release.
My bad, thats right the title is misleading, will see if I could edit it. Thanks for explaining in detail and layman's terms. I get it now
I can see two mortgage insurance. New loan and existing loan. It will make purchase more expensive. Sometimes LMI insurance can be over 20k
