If you are not working, how do you obtain finance from lenders?

Hi everyone

I have talked to a few banks and I posted this question to them:

"if you are not working, would you be able to provide me with a loan?"

The banks that I have talked to have said no.

So, how does it work if you want to stop working and just go full time into property investment?

How do you borrow money when you don't have a job?

What if you already have a huge property portfolio and you stopped working, don't tell me they won't lend you money because you don't have a job?

Thanks!

Well if you have a huge portfolio, you have a lot of rental income and hence they may be happy to lend.

If you have no portfolio and no job, you have no income and they won't lend you any money. And fair enough too.

Cheers,

Stuart

++++++++++++++++++++++++++++++++++++++
My New Book Is Out Now:
Smart Borrowers Handbook by Stuart Wemyss
buy online at www.smartborrower.com.au
or at all good bookstores.
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Hi Stuart

Thanks for that.

So, does that mean that by the time you have a good sized portfolio, you would have private bankers that know how you work and would probably be more willing to lend you money?

And would the general rule mean that you actually need to be working for a few years before stopping your job?

Because, some bankers were telling me that rental income doesn't count towards their 'servicing criteria'. =os

You don't need a private banker when you have a large portfolio, just a great broker! :)

If you only have rental income, then lenders can have issues with that because you become "rent reliant". However, there are other mitigating factors like, low LVR, multiple properties = good exit strategy, etc. There's no set formula - my case by case.

However, in the meantime, keep working!

Cheers

Stu

++++++++++++++++++++++++++++++++++++++
My New Book Is Out Now:
Smart Borrowers Handbook by Stuart Wemyss
buy online at www.smartborrower.com.au
or at all good bookstores.
++++++++++++++++++++++++++++++++++++++

Stu,

Does that mean that if all our income were derived from rental income, capital gains (accessed via LOC), and/or stock market investments - we would only be able to obtain finance via lo-doc loans? Thus, also requiring at least two past tax returns?

Is there a way to set ourselves up in a way that all our income would be classed as suitable for conventional financing? E.G is it possible to set up your own company to earn all the income (via streams mentioned above), and then employ yourself so you technically are employed with a salary for "loan serviceablity"?

Your expertise is greatly appreciated.

Vinny

One way we are planning for it, to make life easier, is to have portability on our loans.
This works so that if you sell a place, you can 'port' the loan to another place without having to go through all the form-filling rubbish all over again. Again, ask your broker, but this is what we've done.

Hi there

Yes a Nodoc style loan would assist in this situation whereby income evidence is not available.

On the portability front this is possible however with a securitised loan the purchase and sale settlement dates would need to be simultanous as you cannot use a term deposit account as security.

I agree form filling can be a pain sometimes.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.91%

You would be classified as a full time investor by the lender .