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  5. To all the renovators...... or bank employees!

To all the renovators...... or bank employees! Lock Rss

Okay, so DH and I have decided that we want to renovate our house and do loads of things that we have always wanted as well, including a pool and carport. We wrote a list and we think it will come to around $75,000 or so.

My question is, what is the best way of going about it. I don't think we have a re-draw facility on our home loan but we have loads of equity so how does it work when we go to the bank and ask them for the money??? We want to add it to our existing home loan which we owe now, but is that possible without having to take out a new loan all together?

Any advice would be great so that I have a little bit of an idea when we go to the bank next week. smile

you can get a shorter term 'equity' loan which will be a second repayment. or you may be able to redraw the original loan contract. its often easier, and cheaper to have the 2 payments (higer repay, thou... as if yo redp the loan it will get spread over like 25 or 30 years again....

but in terms of exit/drawing fees, loan insurance and interest saved its cheaper to have the 2 payments

When we decided to add to our mortgage for renos we used whats called in most banks "top up"

They will assess your property and if there is available equity, you can borrow it. They should be able to just increase your mortgage repayments and keep the number of years left owing the same, or you may have the option to refinance again and increase the number of years so that your repayments stay the same.

Also, it depends on the lender, but I dont think you will have any problems if you have the equity and you can manage financially.

The other option is an equity loan, i dont know how they work but i have heard alot of ppl talk about them. You really need to chat to your lender and find out whats on offer, or even check their website you can usually find all the answers.

Good luck

I have a 2 year old now!!

Thanks heaps for that! I guess we basically just want to increase our home loan by the amount we want to borrow to do what we want to do. We don't mind if the repayments are higher each month.

I am so excited and just want to start all our little "projects" NOW! I am so impatient! LOL! smile

You can go to your bank as ask for a Top Up (Increase) current loan.

If you want, try to open a loan product that will allow you to put all the extra money that you dont need straight away back into the loan, and that way you will only pay interest on what you have used so far.

If you have enough equity, thats great. Most banks will lend you up to 80% of the value of your home and even up to 95% (but you will have to lenders Mortgage Insurance)

One thing you need to understand is, that Having equity is one thing, and being able to borrow against it is another.

Basically your incomes need to be able to support (service) the amount you need.

Most peeople already understand that.

But it seems i have a weird batch of clients that dont! for eg, one client had a home that was owned outright. Which meant he had 100% equity. But he didnt work! So he couldnt understand why we wouldnt lend him money.

I blame CBA for that lol (Equity mate ad)

Thanks SweetDreamz! Both DH and I work, him full-time and me part-time, so that is not a problem. I knew about the 80% thing and not having to use mortgage brokers if you are under that, but just didn't know the best way to go about it. But your advice is great, thank you! At least when we go to the bank next week I will have some idea what I am talking about and what I want. smile

WE are half way through doing renos to this house ..we had estimated that we are going to need $60000 by the time it is finished ...we took on a line of credit so that we live off our credit card adn all Hubbies pay is put inot the house ..and we can use that money more wisely !! we did it this way as we would have spent more money of redraw fees also ...we had to change from our sixed rate toa varable rate as you cant have a fixed rate on a line of credit !!
Hey LukesMum! Thanks! We did have a line of credit some years ago and hated it! The interest was huge on it and it took us forever to get it back up to what it was.

I'm not sure I would go there again as I hate not having any savings as such and living off the banks money which is what was happening for a couple of years with our line of credit. We learnt our lesson with that.

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