Hello from your newest member!
Can anyone help me with this?
I have just refinanced my investment property (the only property I have) to access the equity. Using this equity I can purchase further income-producing properties, each with their own loan. If I make sure these are all cashflow-positive investments, will there be a limit as to how much I can borrow or can I go on ad infinitum?
I understand the LVR (loan to valuation) issue; that is not what I am asking about. Will serviceability become an issue at some stage?
Any help would be most appreciated.
Michael
[email protected]Remembering that the lenders will add 1.5% to the loan when calculating your serviceability there will come a time when either serviceability runs out or the banks deem that you are too “rent reliant”.
If you are using LMI this time may come sooner.
At this point we find another lender and/or mortgage insurer.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Todays Hot Rate
***3 year fixed – 6.49%***Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Michael,
The general equation for figuring out if a property will add to your servicability or detract from it is this…
Assessed annual rent – Assessed annual interest
(Rent received x 80%) minus (amount borrowed x interest rate+2%)
For example.
If you found a property returning $11,000 pa, you would have an assessed rent of $8,800pa. (80% of rent)
If you were borrowing $100k, at 6.5%, your assessed interest would be $8,500pa. (100k x 8.5%)
In this situation you would have slightly increased your servicability (ability to borrow more money)
Different lenders assess things differently, some might add 2% to the interest rate, others only 1%, some take 80% of rent, others more, some less, and different amounts on different types of properties eg serviced apartments are usually only 60% of rent received.
Pete
i think you have won the most vaguest post of the year – and i’m not even a moderator!!!!
mate … if you want a better answer, ask a better question.
brahms
mortgage broker
[email protected]cheers
Brendan Heagney
Mortgage Broker
07 3240 4815As long as you have deposits, you will be able to buy properties. It will gradually get harder, with interest rates rising the harder it gets, but it can be done.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thank you all for your help and especially to Pete who provided a clear explanation of how serviceability works.
I am still puzzled as to how Steve McKnight managed to keep on borrowing so much with so much of his cashflow being passive, ie not from a salary/his own exertions.
Michael
Michael
We have wrapped over 152 properties in SE Qld as a specialised wrap company.
We were lucky enough to have decent assets which the Bank secured and provided separate funding for the wraps to a level of 80%.
It has taken over 8 years to get where we are now so it will not happed for you overnight.
Be patient and put in the hardyards. As Terry mentioned anything can be done it just gets a little harder as time goes on.
Thankfully we had very good support from one of the major Banks who wanted to retain our development business and therefore had no problem with wrapping.
I accept the story might be different now for individual wrappers.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
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