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Pulling Equity

Discussion in 'Real Estate' started by crdm, 12th Aug, 2008.

  1. crdm

    crdm Member

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    Just finished renovating a property, and now looking at re-valuing the IP to get some equity out of it "hopefully". Now if we choose to go with a independent valuer as oppose to the banks valuer, how is the best way to do this? The IP is in QLD. Do we just find a valuer and get the valuation done and submit it to bank, or contact the bank first and say we are looking at re-valuing the property? Any advice would be appreciated. The loan facility has a top-up ability, as we don't want to refinance as we are fixed at a low rate. cheers
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    You don't generally get a choice - if you want money from the bank, they will use their own valuers to determine what the property is worth.

    If you get your own valuation done it will most likely only be of interest to you personally.

    Go to the bank and ask them for a top-up loan, but generally I'd suggest using a good independent mortgage broker to do the leg work for you (although this may not achieve that much if you can't/won't refinance).

    What are you planning on doing with the money? Is it all for investment purposes? If some of it will be used for private purposes, you must keep that separate from your investment loan, lest you contaminate the entire loan from a tax-deductible point of view.
     
  3. crdm

    crdm Member

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    Hi and thanks, looking at using the funds for investment purposes, maybe another IP.

    Generally speaking will they value higher when refinancing as oppose to a top-up loan? Hadn't considered refinancing as our rate is around 7% and still in the 1st year of the loan. cheers
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The valuation is done by an independent organisation, they won't care whether it is being refinanced or just a top-up loan.

    However, if you refinance to a new lender - they may use a different valuation company, which may give you a different result (but it could just as easily be a lower valuation!).

    You won't know which will be the case and you can't compare valuations - it's not like getting a couple of real estate agents to give you an appraisal - valuation for lending purposes is a very different exercise.

    I wouldn't be refinancing at this point - you won't get a 7% loan if you do! Just stay where you are and get the top-up ... but watch out for fees and charges - it shouldn't cost you much (if anything) to do a top-up.
     
  5. crdm

    crdm Member

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    thanks for the advice.. top-up sounds the way for now. If we are looking at buying another IP, is it best to hold off on the top-up loan and get the new loan secured, then get the top-up? Hope that makes sense.

    cheers
     
  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Hmm - that's a bit more tricky.

    If you don't actually need the equity from the top-up to fund the deposit on the new IP, then I guess it doesn't matter so much.

    It depends on how close you are to your servicability limits. An independent mortgage broker should be able to help you work out how you are likely to go with that.

    Assuming servicability won't be an issue - I'd get the top-up done first (should be quick and easy - in theory!) ... and then work on the second IP, which might take longer to arrange. Get the easy stuff done first I say.
     
  7. crdm

    crdm Member

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    thanks for the advice.
     
  8. voigtstr

    voigtstr Well-Known Member

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    is a top up loan the same as a LOC?

    We applied for LOC for the equity of villa unit. The house was valued, and we got a LOC for 20k with a balance of zero. We only pay interest on the amount drawn from it, we just withdrew 1k for the deposit on a new place last week.
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Not necessarily the same ... you could use a LOC, but a top-up could also be an extension of the current loan, or it could be an additional loan facility (which is what I do - you end up with multiple loans per property).