Accessing equity

Tom asks:
(updated on Thursday, July 05th 2012)

I currently have two rental properties with one bank and wish to buy another. My net borrowing is 80% of market value with most of the equity in one property ($100,000) and only $10,000 in the other. What can I do to gain access to this $100,000 equity? Or is there perhaps a better way to go around acquiring my third property other than trying to free up this equity?

Our Experts Answer:

Banks are always going to require that some of that equity left in. Based on what you have said I am picking that your portfolio is worth $550,000 with $440,000 of debt. Some banks will look at lending between 85% to 90% for a further purchase so as long as you meet the servicing criteria you should have a pretty good chance of borrowing further. Note however, that some banks may now limit you to 80% meaning that you may need to change banks to access further funding.

Heartland Bank - Online 1.99
Kainga Ora - First Home Buyer Special 2.25
HSBC Premier 2.25
Westpac Special 2.29
TSB Special 2.29
BNZ - Classic 2.29
ASB Bank 2.29
ANZ Special 2.29
Kiwibank Special 2.35
ICBC 2.45
SBS Bank Special 2.49
Heartland Bank - Online 2.35
HSBC Premier 2.35
ICBC 2.45
TSB Special 2.49
SBS Bank Special 2.59
BNZ - Classic 2.59
ASB Bank 2.59
China Construction Bank Special 2.65
Kiwibank Special 2.65
The Co-operative Bank - Owner Occ 2.69
AIA 2.69
HSBC Premier 2.89
SBS Bank Special 2.99
The Co-operative Bank - Owner Occ 2.99
AIA 2.99
Westpac Special 2.99
ICBC 2.99
ASB Bank 2.99
China Construction Bank Special 2.99
BNZ - Classic 2.99
TSB Special 3.19
Kiwibank Special 3.19
Heartland Bank - Online 2.50
Resimac 3.39
Kiwibank 3.40
Kiwibank - Offset 3.40
Kiwibank Special 3.40
Bluestone 3.49
Select Home Loans 3.49
ICBC 3.69
Heartland 3.95
The Co-operative Bank - Owner Occ 4.40
The Co-operative Bank - Standard 4.40