I have recently purchased an investment property using the equity on my current house.
The property was mostly purchased for capital growth but I will be renting it initially to help with repayments.
I estimate that if I rent it on a lower amount, I will be out of pocket by about $1500 a month (for repayments, maintenance and rates). As I have quite a bit of equity, I was planning to borrow more than the value of the house and the stamp duty and actually pay the $1500 from the equity amount rather than my own earnings (I am planning to put all of my earnings towards my primary place of residence).
I believe they are called ever green loans for investment properties.
Can someone explain them in a bit more details in terms of what can and cannot be done and the implications of the loan.
Do I need to move the equity into a different bank account and then have it paid automatically on a monthly basis into the investment property loan so the bank doesn't question it?
If the market goes down, can the bank take the extra money (the equity) away?
Can the interest paid still be tax deductible on our income?
Edit:
I have just looked around and evergreen loans may be slightly different but what I want to know is what I have explained above.
The property was mostly purchased for capital growth but I will be renting it initially to help with repayments.
I estimate that if I rent it on a lower amount, I will be out of pocket by about $1500 a month (for repayments, maintenance and rates). As I have quite a bit of equity, I was planning to borrow more than the value of the house and the stamp duty and actually pay the $1500 from the equity amount rather than my own earnings (I am planning to put all of my earnings towards my primary place of residence).
I believe they are called ever green loans for investment properties.
Can someone explain them in a bit more details in terms of what can and cannot be done and the implications of the loan.
Do I need to move the equity into a different bank account and then have it paid automatically on a monthly basis into the investment property loan so the bank doesn't question it?
If the market goes down, can the bank take the extra money (the equity) away?
Can the interest paid still be tax deductible on our income?
Edit:
I have just looked around and evergreen loans may be slightly different but what I want to know is what I have explained above.
Last edited: