Property investment hopes

Question from Maria updated on 3rd April 2012:

We have been paying a mortgage for almost six years. During that time we had to refinance our home twice to consolidate our bills. Last year we decided to buy a second home for ourselves and look at using our current home as a rental property or possibly even selling it. The bank where our current mortgage is declined our application because we've already borrowed the maximum we can. I was hoping to start investing in properties but now I don’t think we can ever achieve this goal because we don't have enough equity in our home. Is there any way we can buy another property using our current home?

Our expert Kris Pedersen responded:

It will depend mainly on what available equity you have in your own home. If after pulling out enough for a 10% deposit for an investment property you have less than 10% equity remaining in your own home then it may be unlikely that you will be able to purchase an investment at this stage. Note however, it may be a case of you being with a more conservative bank currently and needing to refinance to one who is more aggressive and will look at your position. Also note that at the higher LVR levels, the banks get more conservative so want higher income capacity, low consumer credit levels and good overall credit history.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz

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