20% equity in property , new purchase 40% equity.

[james55]

hi,
I own a property that was purchased last month and I put un 20% deposit (managed to get preapproval before the 40% rule came in).

I am now doing work on it (adding bedrooms).

I am wanting to use the increased equity (around 25% more)to purchase another property.

Would my current bank that had 20% equity in it take all the increased equity since the rule is now 40%? Or can I go to a different bank and use the 25% increase in equity as a deposit on another property?
Can you have 2 banks have an security over the same property?

[Bobsyouruncle]

There is much debate and conflicting action from banks right now. They are tightening up so you would have to assume you will need 40% across all properties. Then go to the banks and see if one will play ball. You can have a first mortgage with one bank and a second with another, HOWEVER there are risks as the first position bank can object to the second. A lot of people attach the second and hope the first bank never finds out :-).

[Nick G]

Would my current bank that had 20% equity in it take all the increased equity since the rule is now 40%?
>> YES

Or can I go to a different bank and use the 25% increase in equity as a deposit on another property?
Can you have 2 banks have an security over the same property?
>> You can only have one entity as first mortgage (low rates).

You should consider Resimac instead.

[james55]

Kiwibank said I need 40% equity in both properties if I was to proceed with them

[Nick G]

Pretty much.

[Bobsyouruncle]

Kiwibank said I need 40% equity in both properties if I was to proceed with them

That's what we told you.....

[brokerman]

With a non Bank lender we get to 80% for investment and the 20% deposit can be cash or gifted or saved or a topup on the current mortgage. Alternatively you refinance the current property and have 80% across both.

[propertybuyingNZ]

With a non Bank lender we get to 80% for investment and the 20% deposit can be cash or gifted or saved or a topup on the current mortgage. Alternatively you refinance the current property and have 80% across both.

Hi Brokerman,

would it be possible to get 80% Resimac and then refinance after a year with a bank?
afak refinance for the same amount of debt does not need to follow the new LVR rules.

cheers

[Anthonyacat]

Hi Brokerman,

would it be possible to get 80% Resimac and then refinance after a year with a bank?
afak refinance for the same amount of debt does not need to follow the new LVR rules.

cheers

My understanding of the refinancing rule is that it only applies to transfers between registered banks. Otherwise this would entirely defeat the point.

On the other hand if you went with Resimac at 80%, and over the next year saved hard and reduced the mortgage while the price kept going up, you may well be able to refinance after a year as it could be under 60%.

[brokerman]

Hi Brokerman,

would it be possible to get 80% Resimac and then refinance after a year with a bank?
afak refinance for the same amount of debt does not need to follow the new LVR rules.

cheers

In theory anything is possible! However I would not arrange this as the only person who makes a profit is the borrower. The Lender loses and the Broker loses if the loan is repaid within 27 months. A 12 month plan is a bridge so rates mid eights and expect 2% in fees, that way everyone shares the cake. Hope that helps!

[PTILoveYou]

hi,
I own a property that was purchased last month and I put un 20% deposit (managed to get preapproval before the 40% rule came in).

I am now doing work on it (adding bedrooms).

I am wanting to use the increased equity (around 25% more)to purchase another property.

Would my current bank that had 20% equity in it take all the increased equity since the rule is now 40%? Or can I go to a different bank and use the 25% increase in equity as a deposit on another property?
Can you have 2 banks have an security over the same property?

The bank will work based on 40% for any top ups / refinance to another bank, if it is an investment property.