Forums / Getting Technical / Finance / First timer question – WHERE TO GET A LOAN

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  • Profile photo of smsaustraliasmsaustralia
    Member
    @smsaustralia
    Join Date: 2003
    Post Count: 6

    Hi guys and girls,
    I have just finished reading Steve’s book ( 0 to 130 properties ) and found it compelling to say the least. I have always believed in this type of method for my own business ( dont buy anything work related unless it can earn positive cashflow from day one and superceed it’s purchase price in the short term ) and am convinced of the possible outcome. HOWEVER !… I have had two defaults in my time ( Im now 33 and somewhat wiser ! [:)] and much of my income is cash ( Im in the cabling industry – phone, security, CCTV, PayTV and FTA TV plus comms installations ) and therefore has not been properly “accounted for”. I have a partner who also earns cash on top of her “normal pay structure” and between us we have good financial resources BUT have not been too clever in the past with the right investments ( meaning we have little to show on paper – plenty to look at in our apartments though like a $100,000 recording studio ! ).
    We’d like to buy our first house, prove to the lender we are appropriate people to lend again to over toime, and then begin positively gearing property using the equity from that house in addition to savings we accrue on the way BUT where does one begin when they have had a “shaky” ( not tooo shaky ! ) financial tree and little to show in the way of paperwork ?? We happily pay out $370 per week in rent and have no problems with that, but our peoblem is getting our first loan to prove ourselves without much proof that we’re good people behind us !
    Long term SELF employment history ( ongoing contracts ) and “well off” families behind us ( no chance of guarantors though as mine live in NZ !! ) we DO have the power to succeed, but need some help getting established … where oh where does one start ?!!
    Happy new year to you all – look forward to seeing you on the other side of 2004 ..
    all advice happily looked at !
    Cheers
    Patrick and Heidi
    SOUND MEDIA SOLUTIONS

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Hey guys,

    Depending on the defaults and how old theyare you might have little trouble – or maybe a lot!

    Best to find a broker who has experience with this type of lending and get some direction.

    Your deposit will help as well. If you have over 20% plus costs then it should be OK. The lower the deposit the harder it will be as the mortgage Insurers are the ones who say no in these situations and they get involved at 80%+ loans! 90% with some lenders.

    All the best,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of picja1picja1
    Member
    @picja1
    Join Date: 2003
    Post Count: 144

    Age is really only one factor, when it comes to defaults.

    The most important parts to determine the appropriate lender would be;

    1)How much the defaults were for?
    2)Are they paid?
    3)How old are they? If, older than five years, they would, generally, not be on credit file, unless unpaid or bankruptcy etc.
    4)How did they come about?

    This will determine, (along with normal application critera) what lender would suit you and what deposit is needed.

    I’m sorry Mortgage Hunter, I have to disagree with your comments on deposit rate. There shouldn’t be a problem with mortgage insurance, through the correct lender, many discharged bankrupts go through at 90% lvr with very competitive interst rates (actually, lower than the 4 majors,currently)and with ease. If you have a higher deposit it just makes more lenders come to the party, which is not really needed, when already available lenders are competitve in interest rate and features.

    If the defaults are out of these lenders criteria, with other lenders, non-conforming lenders, it would be a breeze, these lenders are higher interest rate, however, have products like 5% deposit no geniune savings and lend to major creitd impaired customers ( unpaid defaults/judgements, forclosure etc.). These lenders are generally used as a stepping stone or foot in the door cases.

    I do get the feeling though, that these defaults are realativly old, if that’s the case, there shouldn’t be a problem with ending up on a good interest rate.

    In regards to self-employment, it would be no problem as lenders have products called Lo-Doc loans, where the self-employed applicant, self declares his/her income as he/she can not provide financials or chooses not too.

    If you would like any assistance,

    [email protected]

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Smsaustralia,

    Might I suggest you give Picja a call. A ten minute phone chat asking him all the questions you need and giving him all the info he needs will take you a long way closer to seeing where you actually stand.

    Cheers,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    First, it may be wise to get a copy of your credit file to see what is on there. YOu can get a copy from Baycorp for free (they need a signed fax). the web address is http://www.creditadvantage.com.au.

    Terryw
    Discover Home Loans
    North Sydney
    [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/

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Had trouble finding the free service so here is the link.

    http://www.mycreditfile.com.au/personal_information/free_credit_services.asp?CountryID=1&UserTypeID=11

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of smsaustraliasmsaustralia
    Member
    @smsaustralia
    Join Date: 2003
    Post Count: 6

    Hi guys and gals !
    Pretty overwhelmed with the response actually :)
    Things dont seem so bad afterall and Ill be giving PicJa a call very shortly methinks.
    I have a very old default which was due to a disagreement to the tune of $3000 ( car loan of $25000 initially about 4 years ago )which I have refused to payout – probably not a wise idea but seemd the appropriate thing to do at the time – I dont like being ripped off simple as that so I stuck to my guns but they still got the default in :(. and yes they DID rip me off I shouldnt have to pay them but anyhoo …
    I actually earn quite a good income ( around 80-100k pa depending on how many big contracts come up/cash jobs etc ) self employed although a part of that is cash money so my tax doesnt make me look as flash ! It also doesnt make me look very clever that I havent saved much – but then again silly ol me built a recording studio at home to the tune of $100,000+ over the past few years and I SO DONT want to sell it !!! Pleeease dont make me !
    As for deposit I have the 7k new home grant available to me, plus $8000 in savings plus an extra 6k sitting in my second car which Ill be selling in January along with some business items to teh tune of $3000 BUT I need to reduce my CC debt too which is too high for my liking.
    as for extra income I can put away at least 300 per week if not more and have 1k in rental bond – for which Im paying $280 rent a week by myself on top of the other bills so would rather be putting that into equity !
    I earn $1500 easy GROSS per week self employed through hte books … you can work out the rest yourselves ( shocking I havent saved more huh – read recording studio madness ! ).
    I had another default which my ex girlfriend left for me to the tune of $800 but Ill be paying that out this month – but it IS recent so this may damage me – she was such a lovely girl ;)
    Finally I am paying off my business vehicle ( $24K down to about 12K at present ) and have no other Credit loans etc apart from my nasty little credit card – but the bank does keep making it bigger because I am a good payer ( National Bank Gold Card ).
    I guess the situation isnt as bad as it seems BUT the reason Im all in a tizz is because I tried to geta loan before and they discovered that I had TWO Credit reports that needed to be linked and apparently that stuffed me up because I had an undeclared default on the one I didnt know about ( The car figure 3k ) which rather annoyed them apparently !
    I have already got my credit report recently and it looks ok – it does list the two defaults, but also has several “applixcations” that never went through from the house loan aplication two years ago.
    I gather it was the insurers that let me down on that one because I didnt declare the default to them.
    Any further advice greatly appreciated – my partner has a good income too – am I better to go halvsies with her ? We’d rather not do that because she is elegible for the 7k as well and we could use that for our first investment property later – yes I do know we have to live in it but hmmmm perhaps not ;) ( we have our plan ! just need to get advice on getting that first loan so we can show what excellento people we are these days !~ ).
    Again thanks SO MUCH for sharing your thoughts – Ill definitely be followintg through – but might let everyone have a nice new year nbefore bugging them over the phone!!
    Enjoy the silly season – Ill be being pedantically mature and saving my pennies ;)
    Cheers
    Patrick and Heidi

    SMSAUSTRALIA – THE cabling professionals ! CCTV, DATA, PHONE, PABX, FTA, SATELLITE, and Audio Visual / Home Theatre.

    Profile photo of picja1picja1
    Member
    @picja1
    Join Date: 2003
    Post Count: 144

    With your car default, depending on the lender, you may not have to pay this out. Normally, lenders would require all defaults paid out, prior to or at settlement(best to payout before settlement as lender, will lower interst rate nad increase LVR). In this instance ( you are disbuting the default), it may not be a requirement to pay this default, before or at settlement.

    In regards to the other default ($800), I wouldn’t be to concerned over, it certainly won’t stop you from getting a home loan. Also, in regards to applications on credit file, still not much of a concern, lenders just require explaination, especially, if they are close together in time frame. Example; 3 or more home loan applications over a 3 month period.

    Need to know a bit more info to fully assess your situation. Only minor things like Purchase price and area etc.
    Looking forward to talking.

    [email protected]
    0428670077

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