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  • Profile photo of Mick CMick C
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    Hi Coogee,

    Going back to the original question….
    A few things about your opening post.

    1. Trust will actually reduce your borrowing capacity ( as you cant use negative gearing) – but def a vehicle for asset protection/ income diversification and land tax etc..

    2. The good old “foreign” investment trick is a fraud in most cases…pretty much it was a “westpac” policy….any foreign income they will take from a simple letter- one of the dumbest policy! but hey westpac probably made Billions writing foreign investment loans…this policy has now changed only as of Oct 0214.

    3. Low doc also won’t work as your not self employed ( i presume?)

    ——a few simple way to increase or really to MAX your borrowing capacity—-

    In order of importance.

    1. Choosing the right lender to use a at the right time and keeping the “easier lenders” LAST – Ie NAB/ Macquaire bank/ AMP etc…

    2. Using up the foundation lenders early on – ie ANZ/ St George/ Westpac/ CBA

    3. Using high LVR early on and sticking with low LVR for your 13,14,15th property etc…

    4. Using the right loan structure – Ie Interest only and know WHEN TO FIX…..fixing can also increase your borrowing BUT only for certain lender and normally it has to be over 3-5 years.

    5. Reduce “bad” debt – ie CC limits/ HECS / Car loan

    6. Increase income ( not easy)

    7. Increase rent ( also not easy)

    8. Buy with the right yield and property type to increase servicing ( change your buy strategy based on your position…ie for me every time i buy a good capital growth property i would buy 3 rental yield property to support the lost…effectively making my portfolio “0” effect = unlimited borrowing)

    9. For something a bit more creative – Invest in Insurance bonds the income can be used in servicing ( taking on some risk though)

    10. for something with a LOT more creative – Flip a property/ renovate and sell – some banks will also take on this income

    11. Enjoy the experience and ride :)

    • This reply was modified 7 years, 10 months ago by Profile photo of Mick C Mick C. Reason: add

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    Being a doctor you will have access to special commercial loans; via the big 4 banks.

    LVR: 75-80%
    Term: Up to 15-20 years possible with 3-5 years i/o
    Rate: Sub 5.20% Variable or fixed from 4.85% for 3 years

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    Security guarantor can be provided by parents/siblings/ uncle/ friends sand even 3rd party—ie no relationship at all! as long as they are happy to sign and provide…

    In fact the bank can come on as 2nd mortgagee as well…so does’t matter to much which lender your Security guarantor is with.

    Normal rate.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    IN Aus you can get 10 and 15 years fixed rate with the big banks..it’s just not common…in fact i think i have only ever written ONE 15 years fixed rate and it was for a non-resident as well.

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    Profile photo of Mick CMick C
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    With a loan of $900 under 80% you will find most borrowers will be on 4.44- 4.54% after rba cut..
    once your loan goes >$1.5M it be 4.34- 4.44.

    all with 100% offset ( not ness a portfolio loan as such) and not your online banks…but big- med size banks.

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    Profile photo of Mick CMick C
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    Half the trick is to structure your portfolio in such a manner that you use the least generous lenders first and then work thru those with more favourable credit policies.

    Too many borrowers are merely driven by interest rates and believe the cheapest rate is the be all and end all. Regretfully they found out

    ^ Richard nailed it on the head!
    It comes down to “order of lender based on your situation” and choosing the right loan structure/lenders.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    With the banning of exit fee….trail books are selling on average 1.3x the annual return

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    Commercial bank valuations will depend on a lot of factors ( you really need to neg and shop around too)
    – Lender
    – Type of commercial ( Specialized/ one shop/ multiple shops/ office/ retail/ warehouse etc..)
    – Cost of the transaction/purchase
    – Location
    – Construction or existing property

    Generally bank commercial valuation can range from $800-$4000+

    P.s Generally you pay…

    • This reply was modified 8 years ago by Profile photo of Mick C Mick C.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    1. Claim % of ownership and usage
    2. if you claim IP % split…than yes you will need to pay part Capital gain tax when you sell as well

    So balance out the options…def sit down with an accountant and work with the 4-5 different scenario and work out which one has the best outcome for your situation.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    1. Mother guarantor and use her PPOR to pay 0% deposit and put savings into offset account for further IP — I would only recommend this way if literally have no money/savings….as you can leverage the full 20%. The risk for your mother is not something i would want on anybody else if your mother is no longer working etc…her security is tired up for a good 3-4 years + …she can’t move,downsize and 2 properties is at risk.

    Given your property will be a IP, should you get sued by the tenant for what ever reason ( rare, but does happen ) ie maybe your smoke alarm didn;t work and the tenant got injured in a fire etc…you will need to sell up both properties potentially.

    2. Mother or close friend with same goals to co-applicant (split deposit) – Now the risk of “argument” can come up and future expectation. It’s not easy finding the same “investing” partner that as the same mind set and future goal…you may be the best of friends but the worst investing partner

    – What happens if one wants to sell and the another dont?
    – One gets married and wants to exit now…or one wants to down size etc…

    Back in my uni days when i shared rent with my best friend of 8 years, all was good till we moved in….not only did i lose a “renting” partner i also lost a good mate. Same theory applies too joint property investing.

    3. Wait 6-8 months and save the remaining $35k for deposit and go solo – Why wait if you found the right property?

    Option 4: Sounds like you have 10% ready to go now? or even 5%? — go invest and take up the 90-95% loan if your ok with the repayments…yes you will need to pay LMI;

    – LMI is tax dedutiable for IP
    – Your property should go up more than the LMI cost
    – No risk of using the wrong investing partner or risking your mum’s house
    – Get in to the market now rather than 6 month later…6 month time the property may have gone up more than the lMI cost you would have paid today.

    Option 5: Can your mum “lend” or gift you the money?? 10% cash.

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    Profile photo of Mick CMick C
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    There’s 2 FHOG in NSW still current as of today.

    1. $15,000 cash grant for new proprieties ( can be completed just never sold), off the plan, vacant land ( lay foundation within 12 month of settlement) – till Jan 2016…

    After Jan 2016 it drops to $10k

    2. Second grant is the Stamp duty waiver or reduction for first home buyers buying vacant land and, new properties and off the plan.

    Both grant has a purchase price restrictions ~$650,000- $750,000 depending on the grant you want to target. Speak to OSR and your lawyer.

    The FHOG can form part of the deposit for your property but if your own deposit is less than 5% in genuine savings you may need to apply for a non-genuine savings loan.

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    Profile photo of Mick CMick C
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    Hi Phil.

    1. Smaller apartments under 40 sq meters generally requires a higher deposit – 30-40% in some cases, depending on the location…so this is one reason why it may sit on the market for a long time as really it’s targeted for cash up experienced investors.

    2. Rental yield is important but Capital growth is equally if not more important for your 1st property, as it’s your foundation property; this is where your going to “hope” to get more equity out in 1-2 years time so you can repeat the cycle

    3. Have you considered an 90-95% loan??? it’s available and for smaller purchases ie under $300,000 the lMI cost ( Lenders mortgage insurance) is not too bad and def more adorable.

    As long as you have an average-decent income and $25,000 in deposit, depending on the lender you choose and your servicing and overall credit file you should be able to buy in the $260,000- $300,000 bracket at a 95% lend.

    4. Focus on t he property, suburb, growth potential,. yield and return NOT THE PRICE.
    Just because it’s cheaper doesn’t mean it’s worth that price.

    5. This is your 1st property and most importantly this money you saved up is your HARD EARNED cash invest in it wisely, dont get the price bracket drive you into the wrong purchase.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    If your want to stick with CBA, if they ask for proof for a 60k cash out…it sounds like your serviceability will pass their calculation but it’s weak…ie low-average income.

    If you wanted to stay with CBA, consider a lower cash out and than increase it later when you find a place…not idea but not much you an do now if the credit assessor has asked for this requirement.

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    Profile photo of Mick CMick C
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    A few reasons…you really need to work with the banks policy and plan rather than aimless apply for the loans/LOC

    1. If you go past 80-85% LVR ( ie your 90%) the use of funds MUST be proven either form
    – Sale contract
    – Letter from accountant/ financial adviser
    – Quote for renovations etc..

    At over 80-85% your limited to Max 20% of the property value as cash out only.

    2. Regarding serviceability if you say your using it to purchase another IP…than they will need to make sure you can afford the 2nd loan as well.

    Note every bank as diff cash pout policy.
    You speak to any investor and they will probably tell you they got cash out of $50,000 – $150,000 with no issues…it’s all about planning for the right lender for the right use. CBA tends to be an average lender for cash out purposes ( if you dont want to give any proof)

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    Maternity leave is ok, are you still on paid maternity leave? if not than we will have to rely on your husbands income which is fine but it will come down to how his “contract is set up as”

    1. Contract as a PAYG still
    2. Contract has a self employed via a ABN

    + How long is the contract for – 3,6,12 month etc..

    I have a feeling the property you found ( 9% yield) is a regional property? if so that’s fine….just need to make sure the bank will finance that area/location and property type.

    But overall doable but a still some unanswered questions before a solid yes can be given :)

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    ^ Disregard my last post…read the OP post again….not bankruptcy but recent defaults on file…diff story.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    Discharged bankruptcy over 2 years is ok with standard banks- ie CBA, Westpac, ANZ, ING etc…at standard rates < 5% and term – just need 20% deposit + good history for the last 2 years. A minimum of 24 months clear record since being discharged from Bankruptcy or Part X Arrangement.

    Never presume.

    But if your file is still pretty bad but yes may need to consider nonbanks or a lower LVR.

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    Profile photo of Mick CMick C
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    It’s possible but requires a few years of planning on the right loans and buy structure, lender and most importantly pre-planning…not something you can do off the bat.

    Most of our flip clients who’s doing this now full time ( flipping 2-3 properties per year ) had to go through a 12-18+ month planning stage. As the only way to get this across the line without working was to consider the “flip project” as a BUSINESS ie your a professional flipper…

    ^ As you can imagine, getting the 1st years income is the hardest and hence why we can’t write the loan till a good >12-month after planning with our brokers and your accountant.

    Else the easy way out is to keep your full time job and using that income to service the loan for the flips. But at the same time you may want to plan for the ^ above if your wanting to do this full time.

    But you can imagine the amount of work required and planning, so really we also pre qualify our clients before we take them on board this flip journey to make sure their financial, mental and desire is strong enough to last the 12-18 month pre planning.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    Job wise it’s fine as you have been there for 12 month min.
    But you might need a larger deposit, as it needs to cover the stamp duty an other standard buying cost as well.

    Mick C | Shape Home Loans
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    Profile photo of Mick CMick C
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    1. Find lender with DUA with Genworth ( the other LMI provider) OR an internal LMI provider …ie not QBE — This option you still only really have a medium size chance of approval as you been rejected by QBE previously and Genworth will always ask ” have you been rejected by a LMI provider in the last 12 month” so your file needs to be absolutely strong + most of the internal LMI provider that does go to 95% ( ie Westpac and ANZ) still have strict conditions and most importantly they still credit score.

    2. Go for a non-bank that offers NO LMI at 95% but instead charges a once off risk fee ( similar to LMI); def higher chance of approval. ON average most client who goes for the risk fee would have either a very active credit file ~25-40 in the last 12 month and want to apply for a high LVR OR some sort of bad credit ( discharged bankruptcy, listed defaults, judgments etc..).

    Risk fee is 0.5-2% higher than LMI cost, depending on lender.

    Option 1 is def preferred…if your file can pass the lenders DUA + credit scoring.

    Mick C | Shape Home Loans
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