I want to buy a new home but i don't know what i want to have but this?


#1

Hi all,

Sorry, title should read “Equity from investment property for buying first home (to live in)” but that’s a bit long.

I recently finished building a house in Australia (I’m living overseas), which we have just started renting out.

We owe: $486,000
It just got valued by the bank at: $700,000

Am I right in assuming I have:

  • $214,000 equity
  • $74,000 equity available to use as a deposit on next property
  • Maximum total spend on Property 2 including all fees (without kicking in extra savings): $370,000

Trying to figure it out. We are moving back to Oz next year and I’m wondering whether buying a house to live without having to chuck in a lot of savings will be possible.

Do those numbers look right?


#2

Different banks might value your property differently, but according to that particular bank $214K is your equity.

I don’t know about Australia, but in Canada, we can use up to 80% of our equity, and at least 20% down payment is required for a 2nd property. Thus, your numbers would work, as long as the bank deems you to have enough income to support a 2 mortgage risk.

You should contact 2-3 mortgage brokers, they should be able to get you a (good) deal.


#3

Yes, I second what Ms99 said. Definitely check with a couple lenders. In the U.S. 75-80% loan to value is standard and they will pull their own appraisal to determine the value, so be aware of that. They will also look at your debt to income ratio.

Also, be sure the lender will include the rental income as part of your total income. Some won’t do it unitl after 6 or 12 months of renting.

And be sure you are not buying in a crazy market. I know Australia market is skyrocketing. I wouldn’t touch Sydney with your money, looks exactly like the U.S in 2007…but heck, I suppose it could run another 3 years so.