loan of 105% of property value

has anyone been successful in finding properties which enable you to be neutral with 105% finance on them from day 1. within a 15km radius from bris, sydney, melb cbd?

renos included but not structural.

 

Yes, of course

 

i just edited it to bris, melb and sydney. which cbd was this in and do you mind sharing some details of the deal?

 

Perth, Adelaide, Canberra.

 

Which bank does this?

And under what conditions?

 

Hey johnny

There's none - you'd need to borrow 25% against an existing property and 80% against the new purchase.

Cheers

Jamie

 

Well you can achieve that via cross collateralised with another loan.

 

Any NRAS property would do it (just about all of them).
In Brisbane not too hard, plenty of dual income dwellings around in logan/ipswich with great yields.
In Sydney, may be able to with a granny flat/dual income in the west.
In Melbourne...yields are quite low, so i haven't seen too many that come across my desk.

 

Why would this be necessary? As @Jamie Moore has pointed out, a 105% lend could be achieved by taking out a 25% lend against an existing property (eg an equity release loan) and a separate loan (likely with a separate lender) to fund the balance of 80%. There is no need to cross-colateralise. It is dangerous to offer two properties as security for one loan.

I've noticed lately there are a few different opinions of what cross colateralisation means which can lead to confusion. Might be a good one for a sticky topic.

 

Can achieve it without it, too

 

You could - but would you really want to? Especially when you can achieve the a same result without crossing.

 

If the person got a PPOR loan and wanting to get an investment loan for 105%, instead of do a loan split on his current loan or a top up, he can cross the security with the investment property loan so that it makes it clear which interest he can claim for tax purposes.

 

I think you're mistaken. Can do 105% without crossing security. Still tax claimable, purpose is still clear and a lot less risk.

 

You can still do this without crossing - here is an example:

PPOR has an existing loan of say $600,000 and there is plenty of equity against it.

You then purchase a property for $400,000 and have a standalone against it of $320,000 (80% LVR).

You need $95,000 to complete the purchase including stamp duty (so thats the remaining 25%).

You can do an equity release against the PPOR so it will have 2 loans - one for $600,000 and the other for $95,000.

When you do your tax the accountant uses the $320,000 and $95,000 loans for tax purposes (eg. negative gearing) as the tax deductibility goes off the loan purpose and not security.

This way you are still claiming 105% and the properties are not crossed.

 

yup that also work, I'm only suggesting crossing is one way not saying it's the only way, it really depends on the financial circumstances of that person.

 

Not sure if trolling? Never cross col please.

 

i know every one hates cross col, but hypotehtically, if the property never goes down or you never default, I dont see any difference between cross col and non

 

15km is hard - Logan/Ipswitch is too far. Sydney West isn't within 15km of CBD.
I take it the CF neutral from day 1 includes the non-structural renos (ie. "day 1" starts after the reno!).
How about some student accomodation down near Nathan? But that boat may have sailed already...
You'd possibly get something out Ferny Grove way, or McDowall "near" the hospital.
Otherwise Banyo may still be possible. Fortunately you didn't mention CG

 

Cross collateralising increases your risk and reduces the banks, reduced flexibility and its unnecessary. It makes no sense to me to willingly put yourself in this position.