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milt1968
29-06-2014, 07:15 PM
I have been doing some research into using equity to purchase a second home or investment property.

What are peoples opinions on this?

Also, what do you think the best type of home loan is?

T

Harvey Specter
30-06-2014, 08:15 AM
If you mean equity in an existing home, its easy to do and banks will almost require a cross guarantee anyway (unless you use different banks).

Best type of home loan - depends. Where do you think interest rates will go. Can you negotiate a good discount of the blackboard rates?

milt1968
30-06-2014, 09:31 AM
I am currently a student at university. I have about 80% deposit on a good house. Am just trying to set up a rough plan for when I graduate.

I want to have a house and also another rental property ASAP.

I am just trying to find the best way to go about this.

From what I understand, if I purchase the first house with 80% deposit, the bank can usethat equity from the first place to lend on the second.

Is this correct?

Thanks for the help.

T

Fred114
30-06-2014, 09:34 AM
Talk to the bank.....they will answer your question.....

milt1968
30-06-2014, 09:37 AM
Talk to the bank.....they will answer your question.....

Im not going to go the effort of going into the bank when things could potentially change significantly in the next 2-3 years.

Looking for peoples opinions or experiences, as above.

Fred114
30-06-2014, 09:49 AM
What is the significant change you see happening in the next 2-3 years?

iceman
30-06-2014, 10:06 AM
I am currently a student at university. I have about 80% deposit on a good house. Am just trying to set up a rough plan for when I graduate.

I want to have a house and also another rental property ASAP.

I am just trying to find the best way to go about this.

From what I understand, if I purchase the first house with 80% deposit, the bank can usethat equity from the first place to lend on the second.

Is this correct?

Thanks for the help.

T

Hi milt1968.
Yes the banks will cross mortgage your 2 properties in a situation as you describe. Remember the interest on the mortgage on your rental is a tax deductible expense, but not on the mortgage on your home. So maybe worth considering all your equity being on your home and a 100% mortgage on the rental, at the outset.
Of course all subject to the banks lending criteria and your repayment ability. But your idea is sound.

I recently bought a rental overseas with a mortgage from my NZ bank secured over my home. Taking advantage (hopefully) of the strong Kiwi dollar !

milt1968
30-06-2014, 11:02 AM
Thanks for the great advice iceman. Will keep doing my research and go from there. Hoping to secure a decent job ASAP after graduation. In the meantime will stick to term deposits while I learn more about different options, including sharetrading. Currently about to bury my head into "The Intelligent Investor"

rentex
26-11-2014, 04:57 PM
Would also suggest talking to an accountant about structure of home/rental for tax and other purposes as you may need to set up appropriate entities before purchase. Good luck~

fungus pudding
26-11-2014, 05:16 PM
Hi milt1968.
Yes the banks will cross mortgage your 2 properties in a situation as you describe. Remember the interest on the mortgage on your rental is a tax deductible expense, but not on the mortgage on your home. So maybe worth considering all your equity being on your home and a 100% mortgage on the rental, at the outset.
Of course all subject to the banks lending criteria and your repayment ability. But your idea is sound.

I recently bought a rental overseas with a mortgage from my NZ bank secured over my home. Taking advantage (hopefully) of the strong Kiwi dollar !

The mortgage on your home is tax deductible provided the money is raised to further taxable income. It doesn't matter what security is used when buying an investment property. Just make sure you get the timing right. Find a property - sign it up then raise the money for settlement using anything the bank will accept.

slimwin
26-11-2014, 07:14 PM
Has anybody used service companies like http://www.propellorproperties.co.nz/ for property investment? Or is this for people too lazy to do the research?

I like the idea of using good advice (for timing etc) but am concerned companies like this only care about making a sale.

nextbigthing
27-11-2014, 12:28 PM
Has anybody used service companies like http://www.propellorproperties.co.nz/ for property investment? Or is this for people too lazy to do the research?

I like the idea of using good advice (for timing etc) but am concerned companies like this only care about making a sale.

Straight off their website - "There is no better time to invest than now,"

Hmmmm, prices are at a peak with rumours of slowing sales and interest rate rises.... not sure that that is the ideal time to buy. More like the time to sell.

If they had such a magical formula they would own all the houses themselves, not be giving advice.

I'm always sceptical about these sorts of companies.

Biscuit
02-12-2014, 10:16 AM
Has anybody used service companies like http://www.propellorproperties.co.nz/ for property investment? Or is this for people too lazy to do the research?

I like the idea of using good advice (for timing etc) but am concerned companies like this only care about making a sale.

I'd be wary, they don't charge you for their "services", so who are they really working for? Your guess is probably as good as anyone else around timing and there is plenty of info out there about property in NZ (Tony Alexander, REINZ etc). There are also entertaining and informative books out there by the likes of Bob Jones etc (BJ once said he would rather boil his head in oil than have residential investment properties). Best advice on structure is probably going to be your accountant and your bank. For management of residential property, its not that complicated and there is info at Department of Building and Housing.

slimwin
02-12-2014, 11:11 AM
Thanks. It's more of a case of what's affordable to me without too much of a restriction on my lifestyle. Accountant is probably a good port of call on that.
Anybody know of a good one in chch for advice on residential investment?

artemis
02-12-2014, 11:21 AM
For anyone looking at, or already in, property investment I recommend Matthew Gilligan's book Tax Structures 101. Newly published and oriented to property investment, though not only.

Biscuit
02-12-2014, 11:44 AM
I would think pretty hard about any "investment" that was going to restrict my lifestyle in any way. I've had the same CHCH accountant for the last 15 years, I have no idea how he compares to other accountants as I've only ever had one other accountant who was much the same. Also, I don't ask him the kind of advice you are looking for, I merely want him to structure things properly. So, would not want to give any recommendation.

slimwin
02-12-2014, 07:04 PM
Thanks all.