Family home security
Question from An updated on 23rd January 2014:
I have a home that is mortgage free but is secured against my rental property as I borrowed 100% ($400,000). I hear that it's not good for security purposes for properties to be tied together? I currently have no savings and have not had a recent registered valuation on my current home but I believe the capital gain/equity is over $50,000 plus. What would you suggest I do now or in the future so the bank can release my family home and not hold that as security?
Our expert Ron Hoy Fong responded:
Currently, it is more preferable to have your home tied together with rental properties than to not have any equity invested at all.
Depending on your circumstance and your ability to service any mortgages, you may even be able to consider purchasing more properties and tying them to your home as well, whilst we are in the "early stages" of the property boom. As the values rise on your rental properties by 25% and the LVRs of them reduce to 80% you can later ask the bank to release the security over your home.
Banks will obviously want to continue to hold your home as part of their security, so be prepared to approach an independent mortgage broker who can help you shift your mortgages around.
Ron loves to share his passion for property and his coaching course provides one-on-one mentoring and support that will empower you with tools, strategies and valuable insights so you can achieve investment success and become a property master.