Equity required to buy a second home

My advice - spend the next 12 months educating yourself in all things property and finance. Revisit your equity position then. In this time you would have paid down some debt thus creating further useable equity whilst learning the ins and outs minimizing potential mistakes.

 

Sounds good I will do that for sure, looking at things I should be able to buy another property within 5 years the only problem is affording the expenses of the property if I don't have a tenant. Like you said more education and getting a better job are on the to do list

 

Lets say you come in to some money like a lump sum from a family member passing. Are you better off paying it off the current home you live in or using it as a deposit for a second home?

 

Both!

By paying off your current home, you reduce your non-deductible debt and at the same time you create equity. You can borrow against that equity for it to act as a deposit against a future IP.

If this does occur, get some advice from a good broker before you do anything. There may be nuances to your circumstances that complicate this.

 

Will do, thanks for the advice

 

Just wanted to make sure my numbers were right here so I am understanding. Lets say bob has a house worth 300 and his remaining loan is 145. so 300-20 % is 240-145 is 95 k equity. He can then buy a house with the equity of up to 475 k. He decides to buy a house worth 450 so minus 95 k equity is 355 plus lets say 25 k fees for stamp duty selling fees etc would mean he has a loan of 380 plus his existing loan of 145. Is this correct?

 

hey Bean - maybe get a real estate agent into your place - to get an independent estimate of the value - so you have a starting point

 

Fair call, I think I was referring to soliciter fees

 

I would not be buying in general in tasmania.

Once the cashed up tradies loose their jobs...looking at those working on the hospital....the economy is dust...I work construction on major national projects, and people don't realise the impact on rentals and the local economy when a large job rolls into town....I also reguarly see the devastated area once it all but finishes.

Also, as for Devonport, I still don't get the appeal. Like most towns up their, industry is drying up, and they only a consequence of Hobart market...

 

Another factor with using equity to purchase another property:

When you consider the equity to use for the next purchase, you can really only access 80% of that equity. I didn't notice if the brokers covered this already in their replies. This is because once drawn, your bank will want you to keep the 20% buffer in place on your total loans.

 

why would they loose their jobs though? There's also a housing shortage so surely the building boom will continue? Devonport is home where friends and family are. happy to look else where for investment property's. The problem is affording elsewhere

 

$95k equity is not free money. It's new BORROWED money with Bob's say ppor as the security. It should be added back to the final loan amount.

So...
Bob's New total loan will be
380k + 145k + 95k = 620k.
380k is secured with the new purchase.
240k (145k + 95k) is borrowed against ppor.

Or...to make it simple,
Total loan = New purchase (450k + 25k ) + existing loan (145k) = 620k.

Hope this helps.

 

One year on and its done 7.27 % growth. Still dont get the negativity