[Mick CParticipant@shapeJoin Date: 2010Post Count: 1,099]

June 14, 2013 - 6:22 am

Hi,

Newly self employed is fine, but you may need to go down the Low doc loan path.

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May 9, 2013 - 12:01 pm

1. Gross rent taken at 70-80% only

2. Servicing rate is based on current standard variable rate + 2% 

So are you still positive after increasing the rate to 2% and taking in gross rent of 70%?

3. It will depend on location as well- http://www.genworth.com.au/lender-centre/tools-and-resources/location-guide-australia/ lenders like cat 1 and cat 2 locations…cat 3 can be a bit iffy and they may discount rent by 60%….

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May 9, 2013 - 11:56 am

Sounds like a rebate scheme of some sort. 

suss…

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April 13, 2013 - 8:08 am

Congrats Jamie!!! 

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April 1, 2013 - 7:12 am

You be classified as a self employed, they will require 2 years full tax returns for them to consider you on their standard full doc loan/mortgage.

OR accountants letter only OR 6 month BAS OR 6 month trading statements for  low doc loans.

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March 27, 2013 - 9:59 pm

Mad.Max wrote:

Yes Terry, I am eligible (post 55) to withdraw all or parts of my super, if I do not intent to work. (Have spoken with super, have the form in front of me.)

The land is paid for. The money I withdraw from super will provide the required cashflow to build; then sell the existing house and move into the new one.

Converted your super to an account based pension- smart move

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March 25, 2013 - 1:07 pm

MRCCON wrote:

Terry, do you essentially get a "double deduction"? Is that possible?

Say, draw from your line of credit to pay for new carpet.

You claim depreciation on your carpet, as well as the extra interest on the loan?

Not really a "double deduction" – you claim the depreciation based on the depreciation value of the  principle ( original amount) …and you claim the interest on the extrra interest you are paying to the bank ( not the original principle amount) 

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March 25, 2013 - 1:01 pm

tkasing wrote:

Hi All,

Ideally I'd like to structure with 20% down $120k – borrow 80% and keep the remaining $280k in an interest offset account.

In reality borrow, $200k @ approx 5.5% = 11k p.a

Tommy

Lenders work their serviceability based on 2% higher then the current rate; incase the interest rate changes.

tkasing wrote:

We can rent out a main ensuite room for $300 p.w which should cover the interest and ongoing costs.

Sub-renting can not be included into serviceability as it's not considered stable.

tkasing wrote:

1) are there any lenders who can see past this temporary set back as we are young professionals?

2) what can people do if they find themselves with a mortgage in our position? There is income protection insurance which is apparently all the rage atm

3) apologies for my lack of knowledge, but how long before the banks start knocking on the doors for a repo even though you've got over 60% equity?

4) I know what I want from my bank currently is similar to a reverse mortgage, but we don't own the place 100% yet

1. Unfortunately with no real income coming in to service a debt, the answer is no.

2. Im guessing your talking abt income protection? well this only works if your working and lose your job because of some injury or unexpected event..Lenders also can't use this as "serviceability" as it's also not reliable. 

3. They will start chasing you up once you miss your 1st payment…equity doesn't mean anything…equity doesn't;t pay the loan/interest- they need to sell to access the equity. 

4. Not sure what your asking here…

Once you get a full time permanent job, even for 1 day; it's possible to get the home loan even on probation, as long as the other financial factors within the loan matches up. 

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March 22, 2013 - 12:09 pm

19th April is almost 29 days away….fixed rate will most likely change by then.

To rate lock it will cost you 0.15% of the loan amount, meaning 0.075% per year – so your rate will be 4.99% + 0.07% = 5.065% per year for 2 years which is still decent.

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March 18, 2013 - 10:20 pm

depends on the bank, some banks are more flexible with cash out.

But yes it does get easier as your LVR reduces. At 85% or below theres pretty much no restrictions. 

Most investors stay around the 90% mark max for equity release. 

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March 18, 2013 - 1:49 pm

That's correct you only pay for the difference in terms of the top up.

How much depends which state your in…but it be around $900-$1,200 for 95% ( dont quote me ..this is just off the top of my head..)

95% internal refinance is possible but by no means easy, also from exp CBA will require very good reason and they will want to control the funds.

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March 15, 2013 - 7:44 am

Wouldn't say it's a reflection on the current market, short term money and cost of funding is extremely low right now…the lowest it has been for a while and will stay at this level for the next 12-18 month; hence why we have been seeing massive discount on offer by some of the major players and non-banks.

Having said that, Westpac has announced a 1% discount on new loans over $500,000 so this might be a reason for the increase in the fixed rate; spreading their cost of funding around and targeting the variable rate more.

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March 14, 2013 - 12:57 pm

wilko1 wrote:

 the last 5 houses i have bought i bought without subject to finance  because i knew without going to a broker/bank that i was within my borrowing capacity once i add the rent etc)

Just want to say for any Newbie reading ^ this can be very dangerous!

Just because you can "Service" the loan doesn't mean you will get the loan approved! 8/10  loans that are rejected by the banks are not for "serviceability issues" i mean before a file is submitted to the bank ( ie from pre-approval to approval) most people will know their borrowing limits already; so literally  there are 101 another reasons why a file can be rejected and serviceability is just one small part.

SO overall, yes find out your borrowing capacity but never buy without subject to finance or with a cooling period JUST because you can service the loan….you need to make sure the bank is going to APPROVE your loan!

P.s wilko1 good post by the way, very detailed. 

Regards

Michael 

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March 12, 2013 - 12:33 pm

Let them know you want to release some equity to invest into property – they will automatically ask you if you have found a place , as they would want to finance and lock you in for the 2nd mortgage as well

I'll provide you with a general run down that suits 70% of investors…however you should really obtain personalized advice rather than follow a generic general advice.

Baisc Steps

1. Valuation carried out

2. Equity release based on amount, LVR and valuation

3. Make sure they provide you with an SPLIT loan, meaning a "second" loan must be created and not just added on top of your PPOR!!  ( important)

4. Also make sure they provide you with an 2nd 100% offset account so that the newly released funds can sit in this account without occurring any interest and also it keeps it separate from your PPOR offset ( also very important)

^ Sometimes you can skip step 3 and 4 by using an LOC. ( but this can come at a cost and it's not always suitable) 

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March 12, 2013 - 10:54 am

^ you don't plan on keeping the property for long so your aiming for Yield rather than Capital growth????

With an 7% yield on a purchase price of $200,000 you would make $10-$20 p/w after expense generally speaking…not sure if that is a good "shot term strategy"…..personally rental yield strategy  works for investors who is after an "hold and forgot" type investment and over a long period of time. 

If your plan on holding your property for only 3-5 year, you BETTER hope it has good capital growth- because the cost to buy the investment (stamp duty, legal, set up etc) will surely eat into any profit you can potentially make if you don't receive a decent CG.

Well that's my thoughts anyway. 

Regards

Michael 

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March 6, 2013 - 9:36 am

Unfortunately your lawyer is correct …if you don't notify the vendor before the cooling period ends, it's atomically  presumed your going ahead with the sale. So you may be liable for any short fall.

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March 1, 2013 - 3:36 am

Definitely an hard deal to place especially at 90% LVR especially with an $10,000 "unpaid" Consumer debt also it sounds like you only just started your current job recently ie less than 12 month; which doesn't help..

Best to pay out the debt first before investing.

P.s once it's paid out, make sure you ring the CC company and get them to list it as "paid" Also it be a good idea to "work" something out with the CC company, it's common for them to reduce your CC rate by half for 6 month, allowing them to recover most if not their full cost back. 

Regards 

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February 26, 2013 - 6:28 am

Hi Katie,

Welcome to the forum.

—Meriton–

* One of the largest and most respectable developer; good quality build and on time most of the time.

* Their stock/properties generally priced slightly higher than the market compared to another OTP ( off the plan)- so hence capital growth can take a bit of a hit…

1. Your question " What should I be looking for in an investment apartment"

Depends what your after, every ones situation is different. factors to consider

– Your financial position and capacity

– Experience 

– Risk tolerance

– Support ( family/ financial )

– Short/medium and long term goal

– Comfort level with investing

– Tax

– Capital gain tax/ Land tax

– Where you are currently in your "life cycle" -ie expecting kids? marriage?

– Stability of work

Generally speaking, OTP carries a certain level of risk and i personally consider it an poor investment unless you have some extremely trustable knowledge source of information that advise you the apartment or location is set to increase in value….as it's very common for OTP apartment to lose it's value overtime due to oversupply, environmental factors, market slow down, builders over pricing, over supply of stock in the same development and lastly mass sales/off loading of stock by the builders and another buyers. 

Before considering OTP as your FIRST property- make sure you have a min 15-20% deposit ready to go …now not later + have a stable work history. 

Regards

Michael 

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February 26, 2013 - 6:05 am

Jamie M wrote:

Property 1

Loan 1: existing loan against property 

Loan 2: separate loan set up to cover the deposit/costs on property 2 (the redraw funds)

Property 2

Loan 3: separate, stand alone loan to cover the remaining portion for property 2

Keep all loans IO with an offset against the one you live in. That's what I'd do anyway.

Cheers

Jamie

^ That's the way i would do it as well.

3 loans in total – one for the existing, one for the split and a 3rd one for the new property. 

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February 13, 2013 - 2:18 pm

Steve – Jamies only gave you a "general " list of lenders that might do the deal…- Do yourself a favour and contact Jamie so that he can carry out a proper analysis.

Regards

Michael 

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