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Draw down the loan and park it or leave it there until required?

Discussion in 'Property Finance' started by Paterson00, 26th Oct, 2015.

  1. Paterson00

    Paterson00 Well-Known Member

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    Hi all,

    not a complete straight forward case here. We are looking at making an offer on a kennel block of land which id $765k. It has a house 4X2 and a 20 kennel facility on 2.5 acres.

    I have $24k saved, I have almost completed a re-mortgage on a property to release another $28k and I have had a loan approved for $28k which I have not yet decided to take.

    If we are succesful with the offer then I will need the loan, if not I may still take it and invest in two investment properties.

    My question is this, should I take the loan now in case they decide to change their minds and just hold it in my offset at 4.6% against my mortgage ( the loan is at 6.9%) or should I leave it there and take it when I do decide I want it.

    The house and kennel will be a ppor so will go through at 5% I am told by my broker so the loan is for stamp duty and legal work and the remaining funds will be deposit.

    Many thanks.

    Paul
     
  2. albanga

    albanga Well-Known Member

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    There are numerous considerations here but before you get the best advice I would just say that borrowing money to park in an offset is VERY bad idea.
     
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  3. JacM

    JacM VIC Buyer's Agent Business Member

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    It depends on the loan type you're going for and the circumstances around your offer on the kennel.

    If you are going under contract on a property, then within a few weeks you'll have to stump up deposit money. If your bank is mucking about with the refinance and hasn't made funds available to you, then you'll be in strife. I have seen banks take extraordinary amounts of time to finalize refinances and equity release, generally due to hopeless staff or inadequate systems and processes.

    In this regard, it's generally "safer" to finalize your equity release / refinance first before you go offering on property that depends upon the availability of the equity release / refinance.
     
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  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Which lender are you using for a $765k kennel with a 6% deposit once stamp duty has been paid?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  6. Paterson00

    Paterson00 Well-Known Member

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    Yes depite wanting to offer I am holding off on that since the re-mortgage of a property is taking forever. Approached the broker over in the UK back in June I think.

    I think I being put onto ANZ Jess but that has not yet been completely nailed as I have not yet finalised the re-mortgage. Your question makes me think that this may not be possible?
     
  7. Paterson00

    Paterson00 Well-Known Member

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    I hadn't even considered the tax implications and deductibility actually so I glad you raised that. Thanks. Sounds like the best option all round would be to leave it there in case I need it and not draw it and if I fall foul with the mortgage application just use what I have to buy a regular investment property rather than two using the loan.
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I've never had to get finance for a kennel, but I'd be highly surprised if it came under normal resi lending - much more likely to be commercial.

    With normal resi ANZ, you need to be an existing lending customer to get LVR's over 90%.
     
  9. Paterson00

    Paterson00 Well-Known Member

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    Thanks Jess. This is a residential house at 4x2 which happens to have a kennel attached. Fingers crossed that is how it is seen. Maybe I will be stumped on ANZ. I did have the credit card with them and have paid it back and cancelled it. Maybe I should take that out again but then that will be another credit check and another 6 months wait so maybe not such a good idea.
     
  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Unfortunately they're much more likely to look at it as a kennel with a house attached.
     
  11. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    There going to need a full val - the valuer is going to go to town on those kennels. Credit won't like it.
     
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