Golden Eggs Case Studies
Case Study 1: New investment property acquisition
Stacey had built up equity in her home since she had been making extra repayments into her loan over the last five years. In addition the value of her property had increased significantly and her employment salary had gone up so she had surplus cash flow. She wanted to purchase an investment property.
Stacey was keen to direct the extra loan repayments she was making on her principal home to cover a loan for an investment property. Her concern was but she didn’t think she had enough savings for a deposit and stamp duty on a new property.
Golden eggs Home Loans were able to demonstrate that she could release equity from her home to fund the deposit and stamp duty and then borrow 80% of the value of the new investment property as a separate stand-alone loan.
We recommended Stacey refinance her home loan to AMP who allowed unlimited cash out up to 80% of the property value. After allowing for her existing loan balance, Stacey was able to access the amount needed to cover a 20% deposit and stamp duty for the new property.
We then arranged a separate loan with Choicelend for the investment property. In both instances, we ensured Stacey could manage the repayments on both loans plus the costs of the new property.
Stacey was able to borrow 105% of the new property costs to maximise her tax deductions. She was comfortable with the loan repayments, especially with rent on the new property helping cover the costs.
Case Study 2: Funds for renovations
Timothy and Natasha had been paying down the balance on their home loan over time and had a current balance $550,000. The value of their property has been increasing at the same time and was valued at $900,000. This resulted in their equity increasing, i.e. the amount they own compared to the amount they owe to the bank.
Timothy and Natasha were keen to do some renovations to the home but were unsure how to fund this. While many lenders let you access equity in your property, they generally require a 20% equity balance remain in the property. This means you may be able access the difference – but only up to a total of 80 per cent of the value of the property. This is called a cash out or equity release.
Lenders will generally want to know how you are going to use funds. Based on this they may limit the amount of the cash out and / or may want to control access to it. Golden Eggs Home Loans understand the various banks’ policies and can help you determine the lender(s) that best suits your needs.
Golden Eggs Home Loans recommended Tim and Natasha refinance to Macquarie Bank who allowed unlimited cash out up to 80 per cent of the property value. In this case, $720,000.
After allowing for their existing loan balance of $550,000, the maximum cash out amount was $170,000. As this will be added to the existing loan, we also ensured Tim and Natasha could manage the higher repayments.
Tim and Natasha completed the renovations and subsequently added substantial value to the home
Their loan repayments increased by $850 month which they were comfortable with and are very much enjoying their new home.
Case Study 3: Joint property purchase with separate loans
Sam and Michael approached Golden Eggs Home Loans to enquire about purchasing a property together to live in. Each had a different amounts for a deposit and their incomes were also different. They could see the value in pooling their funds but were concerned about how they would manage their finances if combined.
Sam and Michael were keen to understand if it was possible for them to have separate loans. Many lenders will allow separate loan accounts (or ‘splits’) but each person is liable for the combined amount.
Golden Eggs Home Loans recommended the Property Share loan from CBA which allows friends to purchase property together but keep their finances separate.
As Sam had a larger deposit, his loan was smaller than that of Michael. The good news is that each only had to be able to show the bank they could afford their own loan. We also recommended they sought legal advice and sign a co-ownership agreement to address considerations such as change of circumstances in the future.
Sam and Michael were able to enter the market with a better property than they could have afforded on their own. As each now have their own loan, they also have the flexibility to structure them to suit their needs regarding loan type, duration and repayments. As well, as they are only liable for their own share, it preserves their borrowing capacity for future needs.
Case Study 4: Offset loan with no annual fee
Jane and Doe approached Golden Eggs Home Loans as they were interested in an offset loan account but didn’t want to pay exorbitant monthly or annual package fees.
For Jane and Doe, Golden Eggs Home Loans needed to find a lender that could provide all the benefits of an offset account but with minimal fees. For those unsure, an offset is a transaction and savings account that is linked to a loan account. It works just like a regular bank account but when coupled to a loan, the balance of the account is ‘offset’ against the linked loan and deducted from the loan balance before interest is calculated.
Golden Eggs Home Loans identified several lender options. Loans with offset are usually part of a package that has an annual fee. AMP and MyState offered an offset with their basic loan for just $5 and $8 a month respectively. We applied to AMP and not only secure the low cost offset, bit secure Jane and Doe a very competitive home loan rate.
Jane and Doe now enjoy the benefit of an offset so nay money they have in that account saves them interest on the loan and helps them pay it off sooner. In addition, instead of paying an annual package fee (usually between $200 and $400 a year), they are only paying a $5 a month account fee.