Hi
Forgive me for not knowing the proper financial lingo but what I am trying to understand is whether or not the forecast rental return on a investment property is taken into account when applying for a loan. If so does this allow me to borrow more ?
My situation is I make 60k PA and have saved a 40k deposit I want to use for an investment property. I am currently unable to see a financial planner due to my work circumstances but I will be able to later in the year.
Sorry to be brief, thanks.
Hi Josh
Welcome to the forum and i hope you enjoy your time with us.
Hate to say a Financial Planner is not legally able to provide you with Credit advice unless they are Licensed to do so as this is the domain of us mortgage brokers.
Yes in the main when calculating your servicability a lender will take your net income and add upto 80% of the assumed rental income of the property being purchased. Then in turn they will subtract the interest they will charge you on the loan (usually calculated at a higher rate to allow for interest rate movements) other monthly loan / credit committments and an allowance to cover your general monthly living expenses.
This will indicate to the lender the amount you can borrow assuming everything else is equal.
By the way most mortgage brokers can provide advice by email and in fact i very rally get the opportunity of meeting up with my forum clients as most are inter or intra state or evern overseas.
Hope this helps.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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