BUY A NEW INVESTMENT WITHOUT CASH
Published: 18.09.2021 by markmortgagebroker
You can purchase a new investment property without using your cash simply by cross-securitising your existing home with the new investment property.
This means you combine the total value of both properties as one total security amount, reducing your overall LVR when you combine the total debt on both properties.
As an example, your owner occupied may be worth $800,000 and you have $200,000 owing. The new investment you want to purchase is valued at $600,000 but with stamp duty etc , will cost you $625,000.
Your total debt is now refinanced for $825,000 over the total security amount of $1,400,000 (value of both properties), resulting in a very good LVR of under 60% risk, all with one lender.
You will be able to split the loan into two components, one being the original owner occupied debt of $200,000 and the other being the total of $625,000 as an investment debt for maximum tax benefits.
In this process both securities are linked to the one lender, but you have been able to take out one loan, without a prior refinance to draw out any cash for a deposit.
In the loan process, this is an ideal approach when you already know the details of the investment property you’d like to purchase. Alternatively you can apply for a pre-approval to determine the maximum borrowing amount for your new investment and take out one stand alone investment loan.