Calculators
How Much Can You Borrow To Invest?
See if you can work out the answer to the following scenario.
Paul and Mary live in Mildura Victoria, and they have a home valued at $300.000, with $120.000 still owing on the mortgage. They wish to use all their available equity to purchase an investment property, Assuming they both qualify on their combined incomes, and the Bank is willing to lend them 80% of the value of their home, what is the value of the investment property they can purchase?
OK, let's work out the figures.
| The Value of their Property | $300,000 |
| Banks will lend 80% of this Value | $240,000 |
| Deduct their outstanding Mortgage | $120,000 |
| Their available Equity | $120,000 |
A 20% deposit is required to purchase an investment property plus 5% to cover purchase costs. So 25% of the purchase price is covered by your equity, and 80% is supplied by the bank. This means, the bank will lend them $4 for every $1 they have.
For example, on a $200,000 property, the bank will lend you $160,000, and you will need a $40,000 deposit plus purchase costs of 5% or $10,000 Therefore, your share of the deal is $50,000.
A nice and easy formula to remember is to take the amount of equity (or cash) you have available, and multiply it by 4. This gives you the value of the investment property you can buy.
So if Paul and Mary have $120,000 equity available, the value of the investment property they can purchase is $480,000 (including costs).
You might like to key in your own figures to the calculator below and see for yourself how affordable investing in property can be, and how quickly you can get started.
This section is temporarily closed whilst amendments are being made. Please contact the office to request an individual report showing you how much you can invest.
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