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  1. #11
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    Default Using home equity

    What Frankenmum said!

    Also need to consider what the replayments would be when interest rates rise. They are VERY low at the moment. If they went to 6-7% for example your repayments would be almost double and the rent wouldn't necessarily go up (or up at the same rate).

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  3. #12
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    Quote Originally Posted by 2BlueBirds View Post
    What about (instead) if I want to borrow $12-15k to renovate my existing house?
    That should be pretty easy to do.

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    Quote Originally Posted by 2BlueBirds View Post
    What about (instead) if I want to borrow $12-15k to renovate my existing house?
    We borrowed $40k against the equity in our house in 2015 to do renovations, no issues at all. The renos added far more than $40k in value to the house.

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    Quote Originally Posted by 2BlueBirds View Post
    What about (instead) if I want to borrow $12-15k to renovate my existing house?
    I'm pretty sure the bank would lend it to you.

    If I was to do that that though, I would increase the repayments on the mortgage.

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    Quote Originally Posted by SSecret Squirrel View Post
    I'm pretty sure the bank would lend it to you.

    If I was to do that that though, I would increase the repayments on the mortgage.
    Ah ok, we are already paying a little bit more, but I see what you mean, it's always better to pay more than the minimum.

  7. #16
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    Can you redraw for the renos? Otherwise you can refinance.

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    Some very good advice has been given. It would come down to you guys being able to afford the extra mortgage that won't be covered by the rent. $500pw rent isn't going to cover the excess mortgage that you have. They will take into account your incomes and current living expenses not just for adults but the banks will includes your kids aswell as a financial liability

    If you really want to invest I'd look more closely not at apartments as there are so many on market and by an agent saying $500pw rent potential it doesn't mean you will actually get that. Sydney Melb and esp Brisbane have so many for sale it's not funny. Interest rates are also expected to rise this year which is going to have a massive affect on those that are mortgaged to the hilt. Then there is the predicted bubble bursting on the property market that I would be concerned will happen.

    My house is has just been valued between $700 to $750k and my mortgage is $130k. I bought in 1999 before housing went through the roof which allowed me to buy the house I have now. Paid $440 in 2004 then bought my ex out in 2008 at $495 giving him $50k and proceeded to spend around $100k on it so far and it's not even finished yet. Dp and I want to buy an investment for our boys but we are waiting to see what happens with rates and the housing market first. We already know the areas we want and our budget which we have to stick to

    Best advice is don't jumped into something quickly because you love it. Invest time and research into what you potentially could do and watch the market. Look up sold prices for the same building and area as sold prices are public knowledge.

    In the end it comes to the almighty buck

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  10. #18
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    Quote Originally Posted by 2BlueBirds View Post
    If you home was worth $650,000 plus and you owed the bank $388,000 (initially borrowed $420,000) would you buy an investment property?
    I'm not too sure how equity works.
    I saw a 2 bedroom apartment in a sought out area (close to beach, shops, train station etc) for $599,000. Rent will be around $500 per week.
    What do you think?
    $500 p/w on a $600k property is not a great return. What is the growth like in this area? If you are borrowing 100% of the purchase price, then the rent at current interest rates will only just cover the Interest payments (investment properties are usually financed with interest-only loans, so you most likely won't be paying off the original loan, certainly for Tax purposes, it's better this way). You will be out of pocket even at today's low rates, because of all the other costs associated with the property, rates, strata levies, management fees and repairs & maintenance etc, so you need to consider whether you have deep enough pockets for unexpected costs, as well as the usual ongoing property costs. Then look at the affordability of the property if interest rates went up by 1%, 2% etc.. also consider whether a loss will save you significant tax, and what kind of depreciation on the building you can claim, if any.. this may increase your affordability..

    Regarding using equity - an easy way to work out whether you have enough to use for the purchase is, add up the value of your current property plus the new property, then multiple this by 80%. This is how much you can borrow from the bank in total. Then deduct your existing loan. If the amount left over is more than the cost of the new property, then you can finance 100% of the purchase price.

    I.e $650,000 + $599,000 = $1,249,000
    $1,249,000 x 80% = $999,200
    Less: existing loan ($388,000) = $611,200

    Where in Australia can you buy a $600k 2bedroom apartment close to the beach? I'm intrigued!

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    Quote Originally Posted by witherwings View Post

    Where in Australia can you buy a $600k 2bedroom apartment close to the beach? I'm intrigued!
    Loads and loads of places. Well under $600k!!!

    Glenelg (some apartments are around $300k)
    Sunshine Coast
    Brighton-Le-Sands
    The Entrance
    Terrigal

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  13. #20
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    Quote Originally Posted by BigRedV View Post
    Loads and loads of places. Well under $600k!!!

    Glenelg (some apartments are around $300k)
    Sunshine Coast
    Brighton-Le-Sands
    The Entrance
    Terrigal
    Yup! On the Sunnie coast 1-2 km from the beach you can get a 2 bed unit for $400k. You can get a 4 bed house (will need a reno) for $500-$600!


 

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