Maximizing Borrowing Power by renting out PPOR

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111111
Participant
@111111
Join Date: 2003
Post Count: 29
August 19, 2003 - 1:56 am
I have a PPOR in Sydney that can be rented out for $450 per week.
I have a also a few IPs in Brisbane.
IP1 : rented for $230/week
IP2 : rented for $245/week
IP3 : rented for $260week
Can I tell the bank that I will be renting out my PPOR (even though I do not intend to rent out) and living in IP1 ?
That will give me ($450 – $230) $220 per week income that will enable me to borrow money for IP4. My local real estate agent in Sydney can provide me with the rental appraisal for $450 per week.
Will the bank accept that ?
If rental appraisal is not good enough , will the bank need a actual lease contract ?
Does anyone have in this situation ?
Any suggestion or advice will be greatly appreciated.
Thanks in advance.
Administrator
Keymaster
@piadmin
Join Date: 2013
Post Count: 3,225
August 19, 2003 - 2:04 am
Hi UmpteenOne, One of the very first things a bank will require will be copies of your lease agreements. One bank even asked me for them when I was trying to go guarantoor for a lousy $5,000 student loan for my daughter!
Banks will typically only count about 80% of your rental income as well (I guess to allow for vacancies etc).
J
RodC
Member
@rodc
Join Date: 2002
Post Count: 335
August 19, 2003 - 2:27 am
quote:
Can I tell the bank that I will be renting out my PPOR (even though I do not intend to rent out) and living in IP1 ?
doesn’t sound ethical to me.
quote:
Will the bank accept that ?
As a bank shareholder I hope not.
Rod.

caz_in_perth
Participant
@caz_in_perth
Join Date: 2003
Post Count: 29
August 19, 2003 - 2:30 am
Sorry but it sounds like mortgage fraud. I’d think very carefully about that.
Just read an article about it in the MIAA magazine while waiting in my brokers waiting room
111111
Participant
@111111
Join Date: 2003
Post Count: 29
August 19, 2003 - 4:04 am
Guys
I don’ think this is fraud.
when I purchased my 2nd PPOR while living in my 1st PPOR, I did not have enough income.
My 1st PPOR can return only 180$ a week while my 2nd PPOR can return 450$ a week.
The bank said they don’t care which PPOR I live as long as I can get a rental appraisal from either property that can support my servicing ability, that’s fine.
So I got a rental appraisal letter for my 2nd PPOR and the bank (CBA) aprooved of it.
propRT
Member
@proprt
Join Date: 2003
Post Count: 4
August 19, 2003 - 4:26 am
Our Loans manager suggested this to us to ‘bump up’ our borrowing power (bumped it up more by reducing our credit card borrowing capacity). All we needed to do was to get a letter from a real estate office stating what they believe it will rent for.
The loans manager stated this is fine as at a pinch we COULD actually rent out our PPOR and live in the investment property.
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
August 19, 2003 - 4:47 am
A Letter from an agent should do it. Even better would be moving back in with your parents or a relative rent free! It is OK as long as that is what you are intending to do.
Terryw
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au