Hi Folks,
I visited my bank on Friday to discuss leveraging off my rental property to buy another.
High level info
I recently had it re-valued (by a bank approved valuer) and the value is now $700,000 so a $80,000 capital gain has been realised. For my next purchase I want:
I want to use the full $80,000 in equity from my first property + a cash amount of $30,000 to make my purchase equity - but this is where I'm running into difficulty with the bank. I thought:
However my bank will only give me 80% of the $80,000 capital gain which is $64,000. Their arguement being that the total lending on the property can only by 80% because of the 20% deposit, however, when assessed across a portfolio this seems irrelevant. Any guidance here would be appreciate, is it possible to use the total $80,000 or 100% of the capital gains (I thought it was) and have a made an error in my calcs (for instance should i have use the new value of my current property when assessing the total value of the portfolio?).
Thanks,
Cam
I visited my bank on Friday to discuss leveraging off my rental property to buy another.
High level info
- Purchase Price $620,000
- Purchase Equity $124,000
- Debt $496,000
- LVR 20%
I recently had it re-valued (by a bank approved valuer) and the value is now $700,000 so a $80,000 capital gain has been realised. For my next purchase I want:
- Purchase Price $550,000
- Purchase Equity $110,000
- Debt $440,000
- LVR 20%
I want to use the full $80,000 in equity from my first property + a cash amount of $30,000 to make my purchase equity - but this is where I'm running into difficulty with the bank. I thought:
- Total value of Portfolio (620,000 + 550,000) is 1,170,000
- Total debt (496,000 + 440,000) is 936,000
- Equity is $234,000
- Portfolio LVR is 20%
However my bank will only give me 80% of the $80,000 capital gain which is $64,000. Their arguement being that the total lending on the property can only by 80% because of the 20% deposit, however, when assessed across a portfolio this seems irrelevant. Any guidance here would be appreciate, is it possible to use the total $80,000 or 100% of the capital gains (I thought it was) and have a made an error in my calcs (for instance should i have use the new value of my current property when assessing the total value of the portfolio?).
Thanks,
Cam
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