Learn how to use funding positions to show clients how they can finance a purchase with two separate deals. In one deal, you create a top-up loan to release equity from an existing property. In the other deal, use the released equity to finance a purchase.
A different article shows you how to achieve a similar client outcome (i.e. leverage equity to finance the purchase of a property) by consolidating the current debt and a proposed top-up loan.
Contents
Prerequisites
Know how to create a funding position.
Video walkthrough
Learn how to create a top-up loan to secure financing for another property purchase.
Creating a funding position
First, create a funding position for the proposed real estate purchase. Add a lender and complete the Funding Position Detail section. In the screenshot below, the client needs about $113,000 (all figures rounded) to close the deal.
Make a note of the $113k shortfall. We'll need that number when we create a second funding position.
Scroll down to the Loan Splits section and enter loan product details. Click Save.
Creating the second funding position
Create a new funding position that outlines a top-up loan for a client property that has appreciated in value.
Click the Add New Funding Position button at the top of the page. A form displays.
Enter a name for the funding position.
Go to the Deal Type field and select Top Up.
Select a lender.
Go to the Funding Position Details section and fill in the fields. The information you add here should reflect the current property valuation and loan value.
In this example, the property valuation is $1,000,000, and the loan is $500,000.
Enter the current value of the existing property.
Enter the total loan amount on the existing property.
Select New Loan Split.
Enter an estimate for bank fees.
Enter the value of the proposed top-up loan. This figure should cover the shortfall in the first funding position.
Scroll down to the Loan Splits section and enter loan product details for this investment property. Click Save As Default.
Generating reports
Optionally, you can generate a separate report for each funding position and show the client how the second property can be financed through a top-up loan on the first property.
Go to the top of the funding position page. Click the three-dot icon next to each position file and select Download PDF.
Optionally, the broker can create a client-facing proposal.
Duplicating the deal
Assuming the client likes the proposal and is ready to proceed, the next step is duplicating the deal. In the end, you will have two standalone deals: one deal to create a topup loan and one deal to finance the second property purchase.
Go to the top of the deal page.
Click the More button.
Select Duplicate Deal. A popup displays.
In the popup:
Rename the duplicate record (we call this the top-up deal)
Check the Funding Position box (this copies the current funding positions into the new deal).
Click the field and select a stage for the duplicated deal.
Click Duplicate. The cloned deal displays on the screen.
Click the Funding tab and confirm that the top-up funding position is the default. If not, click the three-dot icon and select Set Default. Optionally, you can delete the purchase funding positon in this deal.
Go back to the original deal. Optionally, click the paperclip icon and select that filename.
Click the Funding tab and confirm the purchase funding position is the default. If not, click the three-dot icon and select Set Default. Optionally, you can delete the top-up funding positon in this deal.
In the end, you have two deals with two different default funding positions.
Deal | Default funding position |
Top Up Loan | create a top-up loan to pull out equity |
Proposed Purchase | create a loan to purchase a property partially financed by the top-up |