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Sound Advice Sought

Discussion in 'Real Estate' started by TMac, 15th Dec, 2011.

  1. TMac

    TMac New Member

    Joined:
    15th Dec, 2011
    Posts:
    2
    Location:
    Croydon, Vic
    Hi,

    Please be patient with my ignorance - I'm new to the game.

    Problem: I have a 3 bedroom house (owe $266K), 2 dependants with 1 on the way. I had previously set my heart on extending the house both up and out but as it turns out, there would not be much change out of $200K and my current lender will not exceed 80% of the current value of the property which is around $500K. Add to this our need to upgrade our family car also.

    So I'm left with a number of options but would appreciate some guidance from the brains trust (that's you).

    Option 1: Re-finance with a major lender to >90% of est value and pay the $10K mortgage insurance (might be enough to do what I want build wise, but certainly not the car).

    Option 2: Keep the house, rent it out and buy a larger house (and car) with a view to using the equity in the second house in say 5 years time to pay for the extension on our first house.

    Option 3: Stick with our current lender, borrow up to 80% and do a different extension which will see us adding two ground floor bedrooms and extending our dining/kitchen area. (refinance for the addition of a car??)

    Option 4 is to sell our current home and move. Unfortunately, we love the house too much and can't bear to part with it permanantly.

    I sort of get negative gearing but only in lamens terms. I am keen to build a property portfolio for my future security (and that of my children). Hoping you can help.

    Trev
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Or 5. Keep house and rent it out and rent yourself. Take advantage of deductions without losing the CGT exemption and pay a lower rent (lower than mortgage on a similar property).

    It will be hard to get finance on estimated value. What you would need is a fixed price contract and they would lend based on that.