Top up loan - refinance - What are my options?

Hi All,

Was looking to top-up/refinance my current loan (Commbank) from first IP to purchase another IP or stocks. However valuation from Commbank came back a lot lower than my real-estate agent valuation.

Current situation:
Commbank 3.51% - variable loan with offset account. I know this is high, that's why looking to refinance + top up loan.

PPOR - bought 4 years ago at around 530k - own outright.
IP - REA valuation 1.4 mil. Commbank valuation $1,140,000 - 80% LVR.
Loan outstanding - 830k. Weekly rental income - $960/week.

No other debts/loans

Would like to hear what my options are. Looking for an IO loan to offset high income and borrow as much as possible. Is it worth to refinance secured by both properties (IP and PPOR) ? Find another lender?

Appreciate your feedback!

 

Provided servicing is evident you should have a good dozen options outside CBA at lower rates without needing to resort to cross securing anything.

The purpose of the equity release/top up is going to be the key piece to work through as not all policies are created equally.... followed by the specific lender valuations as they'll all be different.

 

Plenty of alternative options out there
Do not cross secure your properties (offer both for security for new loan) you can still borrow against the PPOR (release equity) and the IP and keep them uncrossed.
Get a decent mortgage broker ASAP

 

For starters, don't refinance both properties. That's cross collateralisation and gives you no benefits.

If you own your PPOR outright, consider using this as your equity source. In that case the value of the existing IP becomes irrelevant.

 

It depends what your servicability is.

If your Max borrowing is to it's limits with IP1 then there's no need to refi your PPOR.

But if you have more borrowing power and would like to dip into the equity on your PPOR then you could also do that. But no need to cross it.

If CBA val came back low then you should order upfront valuations with other lenders to see if it comes back higher before proceeding.

 

Thanks for all the responses guys! Going with a broker this time. I think the guy I was dealing with at Commbank was just too limited.

 

Was it a full valuation where the valuer does a walk-through inspection or was it a desktop (computer-generated).

Valuations are not a science and can vary widely between valuers so get a broker to order some upfronts and see what comes back for you to play with.

Ask for a discount on the current rate and if remaining consider a fixed/variable split loan to reduce payments and increase cash flow.