Can someone pleas elet me know if we can do the following. We are looking at purchasing a commercial property (overnight/short stay accomodation) and can't afford it as a commercial property, it is 3 houses and zoned residential. We were wondering if we can refinance our exisiting loans (approx $585,000 equity) to purchase it outright, without explaining to the banks what we are doing. Is this possible, is there a better way?
Thanks
Robyn
Hi Robyn,
Steve mentions this a couple of times in the latest webinar (Commercial Property) have a listen - also it may be a good idea to put this on the main property investing forum (propertyinvesting.com) - you will find lots of other people in the same boat.
Kate
Robyn,
It would pay to be upfront with the Banks in my opinion. It is your equity and how you choose to use it effectively is up to you, subject to showing the bank you can make the repayments. The Yield would be used by the banks as a form of income anyone and would be a very effective way of earning a very nice passive income.
I am not sure why you would not run this past your bank manager. If you are only dealing with a residential lender, then you may find that you will be placed with a commercial / business banker anyway as most local bank lenders only deal in simple residential loans.
Also there is a lot of bad advice on the main web page as well so you need to be careful.
Dean
Haven't run it past the bank manager yet as we have been using a broker, but I am thinking a chat with the bank may not be a bad idea.
Thanks
Telling your broker what you are doing is generally the best idea as they have it in their best interest to get you the loan and they will decide exactly what to tell the banks. Also it may change how your broker goes about getting the loan or ho they go to.
Financially free by 22/05/2017
For an existing line of Credit my understanding is that you can do as you wish. ie take a holiday, or invest....but i have a feeling now though that if you apply for a line of credit (or equity loan) the lender these days will ask you about the purpose you will use the money for (during the approval process). But again once approved i dont think they can stop you from spending it on what you like....
Gievn that you intend to invest - that means more potential security for the loan !! I cant see the banks having too much problem - if they have already approved the line of credit - without the extra security and potential income.
Wobblysquare
- Investing with confidence since 2010 !!
We don't have a line of credit but I think that is the path we are going to move down as our current loan structure feels to restrictive , thanks for your comments