[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

April 6, 2009 - 1:35 pm

To add to Richard's comments, the idea I suppose is that there's nothing to stop you from pulling out all your funds in the LOC tomorrow, in which case you would have a hard debt of $250k which must be taken into account.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 30, 2009 - 3:55 pm

Alan you might want to check your figures a little.

It's likely salt has made an assumption of getting $600 per week in rent which provides more income. Similarly, in working out the borrowing power, the new debt would be investment debt, and so salt would have added in negative gearing benefits. which further enhances borrowing power.

Finally, depending on how long the shares have been held, I would suppose there would be income derived from this investment.

Working out borrowing power is not as simple as "multiplying income by 5" anymore…

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 26, 2009 - 2:08 pm

Your lease should identify how to calculate it. In a standard LIV lease, for instance, look under the definition in the lease for "Consumer Price Index" and you will see that it states "All Groups" for Melbourne as being the correct CPI figure.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 18, 2009 - 10:52 pm

David,

The process is as follows – the bank will determine whether or not to give you the loan based on 2 criteria:

a. Capacity – this includes things such as whether you can afford the loan on your 75k
b. Character – this includes your willingness to repay the debt ie your credit history
c. Collateral – the valuation of your property

1. The bank will first give you a decision based on it's credit policy (ie serviceability calculations, number of defaults you have etc). This is called a conditional approval subject to a valuation.
2. The bank will then conduct a valuation and lend you a certain amount based on it being a percentage of the valuation.

It is possible to get a decline before a valuation – this means you have been declined on policy rather than on the valuation.

If the valuation comes short, it is always easy to amend the loan amount to become 80% of this.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 18, 2009 - 12:32 pm

Andrew is right, paid defaults under $500 should be allowed under CBA policy.

We obtain a credit report for free within 24 hours for our clients. It might be that there is another default that you are unaware of. Saves you 30 bucks or 10 days, however you want to look at it. They have the ability to approve this deal in house, rather than send it to their mortgage insurer.

Also, your current broker should not take 2 months to give you a response! Given the large volumes banks are getting again due to the increased grant, turnaround times are no doubt increasing, however two months is a joke.

The valuation should automatically come up on her system as soon as it is returned to the bank! Don’t be convinced by the line that Cba paid for it – it IS after all, YOUR property Lightyrs! Consider a case where you thought it was 400k but it only comes back at 360k. They HAVE to tell you how much because it impacts how much they will let you borrow.

Finally, in answer to your question, whilst it’s not good that you have a enquiry that has declined, it doesn’t strictly mean you can’t get finance from another lender at all. That’s why you’ve still got all these brokers in here asking you for more details!

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 16, 2009 - 7:31 am

Poto, you can easily get a 95% loan + LMI as an interest only facility.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 14, 2009 - 7:48 am

Consider the following:

hello out there, 

I am in need of advice well it all starts like this:

My wife and i are looking at buying a friends house off him to live in. We will rent out the unit we are currently living in to start off our portfolio. We are hoping to achieve a rent of $___ for our unit.

The tricky part is his house has been valued at 330,000 and has been offered to us for 290,000

Because we still have our unit (and a debt of $x) we can only borrow $230,000, it impacts on our borrowing power. We currently owe $___ and our unit is worth $___

The person at the bank told me that if i dont put our 2 kids down on the application they will lend us 280,000, but I don't feel comfortable about lying on my application. I am considering reporting him because it was those shady lending practices to begin with that caused this whole financial crisis.

My parents have offered for us to live with them as they have a big house. This will enable us to save some more money for 6 months – we are taking the offer but i really dont think we will still get the full amount (why?)
 
I have told my mate about my plans for real estate and he has offered for us to buy the house for 230.000 and pay him 60.000 later on  all done legally of course.
 
Here are the options as I see it:

Option 1
Do I apply for the 280.000 and not put the kids down (although this feels like I am lying on my application, because I really do have 2 kids, so this is not really an option) 

Option 2
Do I take my mates offer (ie, to give him $230,000 and give him the $60,000 later)?

Option 3
Are there any options that I have yet to consider?

No matter what happens we will be trying to save the money first but I'm asking this in case my circumstances change and I am unable to raise the remaining $60,000 in time.

Thanks for taking the time to read my post.  Please ask any questions as I can understand that the lack of punctuation in my previous post rendered it very confusing.

Thanks again 

Kevin2008.

An English teacher I used to be…

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 14, 2009 - 7:33 am

kev2008 wrote:

hello out there, i am in need of advise well it all starts like this imy wife and i are looking at buying a friends house of him to live in and rent out our unit we a currenlty living in to start of our portfolio.
now the tricky part is his house has been valued at 330,000 and has been offered to us for 290,000 but because we still have our unit we have only been offered 230,000 or if i dont put our 2 kids down on the application they will lend us 280,000, my parents have offered for us to live with them as they have a big house so we can save some more money for 6 months which we are taking the offer but i really dont think we will still get the full amount i have told my mate about my plans for real estate and he has offered for us to buy the house for 230.000 and pay him 60.000 later on  all done leagl of course now do i go for the 280.000 and not put the kids down or do i take my mates offer but no matter what happens we will be trying to save the money first but i asking this in case i cant get the money up in time thanks for your help please ask any questions as how i have worded it sounds very confusing thanks again 

Kev,

A constructive suggestion that may elicit some more helpful responses would be to write your request with a bit more punctuation to your sentences.

It sounds as if there are multiple issues here and if you took the time to explain yourself more clearly or at least you gave us a little bit more white space to work with I am sure you will get the sorts of responses that you are after.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 14, 2009 - 7:23 am

I had a situation where there was no body corporate on the contract – my lawyer advised that if there was no body corporate the title couldn't legally be registered as there was no right to use the common property (ie the carpark, stairs and hallways).

He opined therefore that the only way to legally access the property was to fly through the window!

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 14, 2009 - 7:18 am

Agree, agree and agree.

Doesn't matter if it's your first property or your 10th. The right structure should be interest only with 100% offset – ot saves you money and allows for flexibility.

Using duckster's example, a person came into my office and wanted to refinance an investment property that they had paid off 2 years ago that was on a P&I loan in order to purchase a new house to live in (non deductible debt as he is using it for personal purposes). He was frustrated that he was getting taxed on the rent and wanted to claim a deduction on the interest because he thought it was "attached" to his investment property.

If he had it as an interest only loan he could have avoided this mess!

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 14, 2009 - 7:09 am

Also depends on how the building contract is structured ie if house + land package and you pay using progress payments. Typically if it is lodged through the bank FHOG is given when the slab is poured.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 11, 2009 - 9:10 am

Sorry to hear about the divorce.

Please provide details. Thanks.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 11, 2009 - 9:03 am

Rastuss,

You should avoid cross collateralising where possible, and it looks like you probably can in this case.

Pull out more money from your existing property as a separate split, then borrow against the second property to make up the difference (or more).

4 loans should not really be that confusing, as long as all of your money goes into one transaction account (offset account if possible). What happens is that you other loans are interest only and the interest is automatically deducted from your transaction account. This way, you won't miss a repayment whilst removing the headaches!

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 11, 2009 - 8:54 am

Hi Dave,

The trust is usually set up by a property lawyer. It is the lawyer's job to "think" of every possible scenario that could happen and make sure that there is a way to deal with it. This is known as a "precedent".

The lawyer lodges the trust to get stamped at the relevant government office in your state.

Shoot us an email and I can introduce a couple of lawyers who can do this for you, or at least they'll be happy to explain what is involved and how it works.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 11, 2009 - 5:55 am

Terry's right.

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 7, 2009 - 4:48 am

Mate,

There's no postcode restriction!!

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 7, 2009 - 4:31 am

Hi nooby,

How about that? My brother is also stationed in Darwin with the defence force! His wife is a lawyer there too so she might be able to give you a proper legal answer if you like.

I am of the understanding though that if you are just sharing a room within your house then it will have no effect on either of your questions.

Cheers,

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 7, 2009 - 4:23 am

Hi Jamie,

Unfortunately looks like your family member is slightly misinformed. Above 80% should be fine.

Good luck with it

Hany

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 6, 2009 - 2:37 am

St George have just tightened up their policy on 100% loans even further.

Commitment cover ratio is now 1.25% (as opposed to 1.10%) which means you'll be able to borrow less…

[CentralChoiceParticipant@centralchoiceJoin Date: 2008Post Count: 64]

March 4, 2009 - 5:34 am

RAMS will still give you 100%. But their approval times are horrendous.

The 100% loan I would have to say is a dying beast.