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loan of 105% of property value

Discussion in 'Where to Buy' started by Elives, 29th Sep, 2015.

  1. Elives

    Elives Well-Known Member

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    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.
     
    Last edited: 29th Sep, 2015
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yes, of course
     
  3. Elives

    Elives Well-Known Member

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

    D.T. Adelaide Property Manager Business Member

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    Perth, Adelaide, Canberra.
     
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  5. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    Which bank does this?

    And under what conditions?
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hey johnny

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

    Cheers

    Jamie
     
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I think this is more a property and rtn question than a finance q per se ??

    ta

    rolf
     
  8. sumterrence

    sumterrence Well-Known Member

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

    Redom Mortgage Broker Business Member

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    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.
     
  10. JacM

    JacM VIC Buyer's Agent Business Member

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    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.
     
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  11. D.T.

    D.T. Adelaide Property Manager Business Member

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    Can achieve it without it, too
     
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  12. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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

    sumterrence Well-Known Member

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    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.
     
  14. D.T.

    D.T. Adelaide Property Manager Business Member

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

    Shahin_Afarin Residential and Commercial Broker

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    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.
     
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  16. sumterrence

    sumterrence Well-Known Member

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    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.
     
  17. D.T.

    D.T. Adelaide Property Manager Business Member

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    Not sure if trolling? Never cross col please.
     
  18. TMNT

    TMNT Well-Known Member

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    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
     
  19. mcarthur

    mcarthur Well-Known Member

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    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 :)
     
  20. Leo2413

    Leo2413 Well-Known Member Premium Member

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    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.
     
    Last edited: 30th Sep, 2015
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