All Topics / The Treasure Chest / Maximizing Borrowing Power by renting out PPOR

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  • Profile photo of 111111111111
    Participant
    @111111
    Join Date: 2003
    Post Count: 29

    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.

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225

    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

    Profile photo of RodCRodC
    Member
    @rodc
    Join Date: 2002
    Post Count: 335

    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.

    Profile photo of caz_in_perthcaz_in_perth
    Participant
    @caz_in_perth
    Join Date: 2003
    Post Count: 29

    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 :)

    Profile photo of 111111111111
    Participant
    @111111
    Join Date: 2003
    Post Count: 29

    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.

    Profile photo of propRTpropRT
    Member
    @proprt
    Join Date: 2003
    Post Count: 4

    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.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    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
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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