Page 8 - Loan Structure Solutions

would like to buy a second investment property as soon as they feel
comfortable (probably within the next 2 or 3 years).

In summary, we advised Keith and Joanna to access the equity in their
home to fund a deposit of 20% plus costs. They will then obtain a
separate loan for the remaining 80% secured by the investment
property itself.

Step 1: Access deposit(s)

Keith and Joanna will need access to enough funds to pay for a 10%
deposit on the day that they purchase their investment property.
Therefore, the first step is to arrange access to deposit funds prior to
purchasing. In fact, we will arrange a facility to fund 20% plus costs
plus a buffer. Given they would like to buy a second investment
property relatively soon, we’ll actually arrange a facility large enough to
accommodate two investment property purchases. Their financial
advisor has recommended that the investment properties be owned
100% by Keith.

Twenty percent of $600,000 is $120,000. Costs associated with the
purchase include stamp duty ($21,330), legal fees (say $1,500), and a
buffer (say $7,170) = say $30,000 in total. Therefore, we will need a
facility for $300,000 ($120k + $30k = $150k x 2 = $300k). The loan
structure after step one will be:

Loan limit Loan Purpose Loan Security Lender Comment
balance name
$370,000 $370,000 Home Joint Home only Lender A Offset 1
loan
$300,000 Nil 20% Keith Home only Lender A Offset 2
deposit + only
costs

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