You can buy a new investment with no cash by using your current home as security along with the new property. This approach, called cross-securitisation, lets you combine the value of both properties, lowering your loan-to-value ratio (LVR) and reducing risk.
For example:
- Your home is worth $800,000, and you still owe $200,000 on it.
- The investment property costs $625,000 (including stamp duty and other costs).
- Your total loan would be $825,000, secured against the combined property value of $1,400,000.
- This keeps your LVR below 60%, which is considered a safe level.
You can split the loan into two parts:
- $200,000 for your home loan.
- $625,000 as an investment loan, helping with tax benefits.
Since both properties are linked to one lender, you get financing without needing to refinance and withdraw cash for a deposit. This method works well if you already have a specific property in mind. If not, you can get pre-approval to find out how much you can borrow for a stand-alone investment loan.
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Other articles of interest – https://www.domain.com.au/news/affordable-property-in-western-australia-local-tree-change-region-sees-prices-explode-by-31-5-per-cent-1259822/