I currently have my PPRO that will soon be an investment property as I move with work. I am looking at buying my second property that will also be an investment. I earn about 80,000 before tax and take home about 4400 per month and have about 1000 in expense per month Current property is about 315000 - 320000 and I currently have 255,000 owing (about 80%) and pay just under 1000 per month I/O. I am thinking of purchasing a second property that is worth up to about 300,000 and will rent for about 300 per week. My current property will also rent for about 300 per week. Ideally I would like to pull out 30,000 from the first property that will bring it up to 90% (already payed LMI with it) and then purchase the second property at 90% and chip in cash for stamp duty ect if needed. I know lending is a lot tighter now however will lenders still consider another I/0 loan at 90% and let me access the limited amount of equity I have? I am currently with one of the big 4. I have done calculations and can service based on some online borrowing capacity calculators however I'm sure there are some catches. On I side note, I am currently in North Queensland, want has been the experiences with using mortgage brokers who live in another city? Thank you Ryan
Hi Ryan, You'll be struggling to get IO lending over 80% these days unfortunately. Depending on how strong your servicing is and the lender you're with, you may also struggle getting cash out to 90%. Big 4 is good though, you may be in luck. All in all it may be possible if you're happy to pay P&I on both properties.
Not sure about the banks, but what about from a personal POV? Would you be comfortable with the following approximate figures? Total loan = 510-520k Total Salary = +4,400 a month 2nd IP rent = +1,300 a month Total earnings = 5,700 a month Repayment = -2,500 a month Current expenses = -1000 a month Total expenses = -3,500 a month That leaves you with a positive cash flow of 2,200 a month before new expenses. New yearly costs based on a 300k IP I have BC = 2,600 Rates 1,800 Water 1,300 Insurance 300 smoke alarm 100 repairs 2,500 PM costs 1,000 Total costs for new IP = 9,600 / 12 = 800 a month So your total positive cash flow is about 1,400 a month. Things to think about... loss of job interest rates hike(s) personal injury the fact that the bank would be taking so much of your money in interest payments...
Save yourself time and energy and go see a good mortgage broker and work out all your options with them. No matter what you work out on the on line calculations, some MB have discretion with certain things. Just go see a good one.
Hi Jess, Thanks for your reply, thats what I was somewhat affriad of as I much prefer the I/O and offset combination. Cheers Ryan
Thanks for the response, the cashflow is something that would be a big part of my decision and how I move forward. My monthly cashflow being conservative and taking everthing into account with P&I payments would be about 500.. which i wouldnt be to comfortable with.
Definitely the way to go I think, im just the type of person who likes to work everthing out myself first lol
You may be able to do what your seeking - will need to meet lender policy re equity release. Likely best way to present it is to do an equity pull + pre approval for purchase at the same time, thereby giving the lender more comfort as to what you plan on doing with funds at a high LVR. Best to plan for a P&I set up, as it'll be forced with the mainstreams. Being MEDICO and with specific big4 one of the only ways around. You may want to budget that into your cash flow projections, as the P&I set up may mean an impact on living (likely to be c/f negative).
Yes me too, but these days it's a case of working with what's on offer. You'll find that with the difference in IO v P&I rates, it may not be as big a hit as you anticipate.
