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  • Available equity question

    Looking to purchase another property but im not sure if I understand how to calculate the equity needed.

    We currently have 2 properties and some business debt.

    Property 1- Current value is 1.3m- 1.4m (PPOR)
    Property2- Current value 1.2m- 1.3m (Investment property)

    Total debt including business 1.3m
    Its set up as a LTC with most/ all the debt on the investment property and the rest is a revolving account which we are paying down.

    Our business is doing well and we are paying down 5-8k per month of the debt.

    The new property we would like to buy is 1.5m.
    We would short term holiday let it and this is our profession so im sure it will do well but for the purpose of calculating the above we could say long term rent of 800 per week.

    Anyone out there know if I have enough equity to pull this off?

    Thank you,

  • #2
    You can buy up to 1.15 million as you need 20% deposit on your PROR and 40% for any rentals.
    1.3m @ 20% equity required 260k
    1.2m @ 40% equity required 480k
    Left with 460k on equity leaves your bank allowing you to borrow 1.15mil

    Comment


    • #3
      Originally posted by Beginner1 View Post
      You can buy up to 1.15 million as you need 20% deposit on your PROR and 40% for any rentals.
      1.3m @ 20% equity required 260k
      1.2m @ 40% equity required 480k
      Left with 460k on equity leaves your bank allowing you to borrow 1.15mil


      So a bit short...

      Suppose it doesn't matter what entity we buy it in?

      Say for example we buy it in our companies name rather than an LTC?

      Thanks,

      Comment


      • #4
        I've recently been advised by ASB that business lending can be exempted from the LVR restrictions, despite being secured over a residential property.

        Not entirely clear how true this is, and can't find any confirmed documentation to prove this, but could find multiple submissions to the reserve bank requesting this be the case - so as not to stifle New Zealand's small business culture, which is almost entirely underpinned by lending secured over bricks and mortar.

        Basically, my LVR is currently around 55-65% on my rentals (depending who you ask) but ASB are willing to lend me up to 80% if the lending goes towards purchasing a business.
        AAT Accounting Services - Property Specialist - [email protected]
        Fixed price fees and quick knowledgeable service for property investors & traders!

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        • #5
          Anything under 90 days renting may cause your insurance to void in certain parts. Look into it.

          www.3888444.co.nz
          Facebook Page

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          • #6
            Originally posted by Anthonyacat View Post
            I've recently been advised by ASB that business lending can be exempted from the LVR restrictions, despite being secured over a residential property.

            Not entirely clear how true this is, and can't find any confirmed documentation to prove this, but could find multiple submissions to the reserve bank requesting this be the case - so as not to stifle New Zealand's small business culture, which is almost entirely underpinned by lending secured over bricks and mortar.

            Basically, my LVR is currently around 55-65% on my rentals (depending who you ask) but ASB are willing to lend me up to 80% if the lending goes towards purchasing a business.
            Hmmmm.....I wonder if this would apply to my Bookabach/AirBnB property? I've basically set up my own accommodation business.
            My blog. From personal experience.
            http://statehousinginnz.wordpress.com/

            Comment


            • #7
              Originally posted by sidinz View Post
              Hmmmm.....I wonder if this would apply to my Bookabach/AirBnB property? I've basically set up my own accommodation business.
              I can't see why it wouldn't. Though they could probably require you be GST registered and claim GST on the property/charge on the rents.

              But then, I can't even be sure whether the consultant at the bank is strictly correct. They may just be telling me that as a way of explaining their decision to put me in their 5% of lending over 60%. Who knows.
              AAT Accounting Services - Property Specialist - [email protected]
              Fixed price fees and quick knowledgeable service for property investors & traders!

              Comment


              • #8
                Originally posted by sidinz View Post
                Hmmmm.....I wonder if this would apply to my Bookabach/AirBnB property? I've basically set up my own accommodation business.
                Arent all long term hold landlords in the accommodation business?

                Comment


                • #9
                  As far as RBNZ and IRD are concerned, we're just investors, not business owners. Do you want to start paying ACC on your rental income?
                  AAT Accounting Services - Property Specialist - [email protected]
                  Fixed price fees and quick knowledgeable service for property investors & traders!

                  Comment


                  • #10
                    Originally posted by Anthonyacat View Post
                    As far as RBNZ and IRD are concerned, we're just investors, not business owners. Do you want to start paying ACC on your rental income?


                    Broker says no chance on anything less than 40% deposit

                    Fark where am I going to come up with 600k?

                    These new rules suck eggs!

                    Comment


                    • #11
                      Find another broker. I know there are people getting 80% lending on investments right now. May be less favourable rates, but still historically low.
                      AAT Accounting Services - Property Specialist - [email protected]
                      Fixed price fees and quick knowledgeable service for property investors & traders!

                      Comment


                      • #12
                        I love my broker he is the best!

                        I think what you mean is to look at second tier lenders maybe? Lenders other than the big 4 or whatever...?

                        Ive got so much tied up with one of the big banks does that not matter?

                        I mean how do I get the equity out if they have control over all the portfolio?

                        Break maybe?

                        Thanks,

                        Comment


                        • #13
                          Don't look at me - I'm an accountant. Talk to a broker!

                          You'll either get confirmation that your broker is in fact the best, or you'll get a new financing option.
                          AAT Accounting Services - Property Specialist - [email protected]
                          Fixed price fees and quick knowledgeable service for property investors & traders!

                          Comment


                          • #14
                            Clearly broker is not the best. You can get higher LVR's.

                            Comment


                            • #15
                              Options would be very limited on that scenario but I know a provider who would look at it with 30% deposit. PM me
                              Your Home Loan - Wellington Mortgage Broker
                              [email protected]

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