How do you actually use equity and what happens?

[SergeantSFox]

Hi everyone,

I have a couple of questions I was hoping to have answered with regard to using eqity.

Property1-rental property, in a look through company currently being rented out. Loan value approx $300k, CV is $600k.

-How do I access this equity and make it work for me? How do I calculate how much I can get out of it?

Property 2- Owner occupied. Loan value is $500k valuation from valuer is $850k. How do I use this eqity to move forward and purchase more?

When you use equity does the bank just give you the cash difference ie top you up? is this just deposited into your bank account?

What are my options for accessing this equity and moving on to buy more property?

Thanks all

[DazRaz]

Using your equity is a way of saying "take out another mortgage". You borrow money from the bank and you will need to meet their criteria and will have to explain why you are wanting the loan. They care a great deal about what you will be spending the money on.

[donna]

Banks are toughening up on lending (so I read) - serviceability is key borrowing max. 5 times your income to be in the zone.

cheers,

Donna

[Beano]

Net rentals twice the interest cost
So for property one
Borrowings of say $500k
Interest say $25k
Rental say $60k less cost of $10k Net rental $50k
So twice interest cover
Would property one rent for $1200 per week ?