How soon can one access the available equity in a property?

[Bongi]

I am thinking of purchasing a 3 b/r standalone house (South Auck) with a purchase price of 200K and registered current valuation of 245K? My question is how soon can I get access to this available equity and how much can I expect to have available for my next purchase? Assuming no renovation work is done as the property is quite neat and tidy.

[speights boy]

Depends on what the valuation is in 6 months time (my guess), and whether the bank will accept that valuation.

How much of the 200k are you borrowing?

[NovInvestor]

Just talk to your friendly broker or mortgage bank manager.

Some bank can do as soon as 6 weeks I have heard, but I would expect 3 months after purchase is the norm.

If a bank can only do top-up every 6 months, you will be unlikely to use them at the first place.

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Correction, only BNZ is on the front foot, other banks like Westpac & ANZ are still on 6 month policy. However, it's possible you can push the case through if your broker or mortgage bank manager is worth your time.

[Bongi]

Depends on what the valuation is in 6 months time (my guess), and whether the bank will accept that valuation.

How much of the 200k are you borrowing?

Borrowing 80%.

[speights boy]

NovInvestor

Using Bongi's figures.

Are you saying the BNZ will lend 100% of the purchase price (80% of 245 = 196); six weeks after purchase; with nothing done to an investment property?

[NovInvestor]

To SB

Well, it's difficult if you have not made any improvements to a property.

The only scenario i can think off, where BNZ will top up after 6 weeks (or even immediately), with nothing done to the place, is where you purchased a property in double grammar zone, and 30-40% below RV.

[NovInvestor]

Oh South Auckland?

I doubt any bank would refinance within 6 months...

[mortgage broker]

With receipts for improvements you might be able to borrow against the equity there with a bank like Kiwi Bank or BNZ after 3-6 months

[Meehole]

I would throw in some insulation and a heat pump to "add value" and then get it revalued again. Before getting it revalued I would get an updated rental appraisal done as by adding those 2 things you have just made the property more desirable to a tenant and hopefully increased the expected rent a little?
Use the same valuer as before, it might work out a bit cheaper.

[DaveW]

I don't believe providing insultaion will normally pay off. You only spend money on those things that will give you $10 back for every $1 spent.

Using the same valuer is not always a good idea, you want to talk to a few and get a feel for which one will be the best for you.

[Meehole]

Well Dave as a tenant if you had a choice of an insulated house with a heat pump or some form of heating v no insulation, what would you pick? I have been a tenant lately as well as a landlord and believe me it does make the difference.
I have also been into houses in Sth Akld with no insulation and seen water dripping down the walls.
Why would you go and pay another valuer for a full valuation when there is a current one already available that just needs updating? The valuation would be cheaper as he/she already knows the property and has all the stats. If he valued it at $245k in August and then you spend $5000 in September, stands to reason it just went up $5000 at least! Then you can reapply for another loan 80% of $250k. Too easy!

[DaveW]

Valuations can vary by up to 10% between different valuers, however you must choose one that the bank approve of.

Throwing $5k at a property for a $5k value increase doesn't make sense.

[sbw]

Agree DaveW.

Just been through this with Westpac - brought property in June, spent 15k on reno, took before and after photo's to bank with old RV and net RV (same person)... more than happy to increase lending. 5 months - probably could have gone in earlier.