How to use Equity to buy a Property?

Equity Harvesting or Cash out Refinance. We breakdown the jargon and provide an example on how you can refinance your first property to buy a second. Leave a like if you found this topic helpful!

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[noaha]

After about 3-4 investment properties you will start to reach your maximum borrowing limit, unless you can find additional cash flow from somewhere else. Even with the positive gearing properties (with good rental incomes) when the banks calculate your rental income they only take 80% of your total rental income. This is to leave them a variation buffer. So even if you can draw down equity from valuation to get deposit for your next property you can’t get the loan anymore as you reach your limit.

[bailey_jc]

I'd be interested in a video outlining your opinion on property investing vs stocks. Particularily interested in your thoughts comparing manufacted value/cashout refi in property investing vs the benefits that come with stock investing

[speedmao]

Thank you for the great video. Could you give some info on the application procedure, such as (i) documentation needed - how many months of salary slips and other documents needed, and (ii) how long does it take the bank to process the application for cash out equity release?

[BanerjeeSayan]

I like your work. Can you pls help with a new vlog on when you reach borrowing limits how this snow ball works? What is the optimum rental return needed to continue this snowball effect?

[uberboiz]

Wouldn't the overall debt in your portfolio be 'snowballing' as well if you keep taking on top-up loans for down payment for the next property?

[UniversityOfTrials]

What about the implications for cash flow. Do you assume each property is positively geared otherwise yes you can get debt but can you service it? Am I missing something?

[kjveph]

is it better to take out the equity from principal place of residence or from investment property? what is your thought on this? many thanks!

[PsYc]

Equity is not free money. You still need to pay the bank back. They will still assess your serviceability on that equity.

[officialspock]

How many times can you take out equity in a property if its keeps on increasing value every 3-5 yrs, is there a limit?

[adambennett]

So who pays the 400k back on house number 2? if ppl had that kind of money to service both you would just pay out and ay off your house 1. An i cant imagine rent from house 2 would cover the 400k?

[MasterCamus]

Does it mean the total loan for 2 houses would be $800k?

[ntildesley]

Elephant in the room but how do you now afford 2 sets of loan repayments? Hope rent covers it??

[pabzy]

Hey Luke, with the refi amount used for deposit - is it best to get that as a seperate loan?

The interest component of the 80k would be tax deductible if used for an investment property.

I found this out after I’d already done exactly this. Is there a way to still claim the interest on the refi amount? Or split the loan on property # 1 after the fact maybe. Just a bit tricky having them in the one loan and claiming the interest my accountant has mentioned.

Cheers man.

[visionsbykaren]

LOL, none of these strategies ever deal with 'serviceability'. You still have to service the (debt) which is money owed to bank x, y or z and the strategy is very much dependent on an upward trending market (like now Sept 24). In a downtrend ... this strategy means you need to contribute more personally and in like these years, job insecurity, cost of living increases, it is not easy. Do not spend through hard times, there are no quick wins, learn 'how to' now and with patience and dedication prepare to charge in the massive downtred in 2-4 years - IMO..

[susmusmanoj]

Hey u said take equity as cash ?? 🤔🤔🤔

All other YouTube video says that u take a new loan based on ur equity . That means, if u want to buy 480k house

U take loan : 400k
And taken another LOAN of 80k ( which is ur equity)
So total loan is 480k

But where is the cash here ? 🤔🤔🤔