I’m a newbie to investing, and recently in my researching somebody told me that the banks, when assessing my ability to service new loans, do not accept rental income from property investments as part of the assessment. Their point was that since there is no guarantee the property will be rented, they would not include the potential income in my ability to service any loans.
Can someone shed light on this for me?
cheers
abundance
That is incorrect advice. As a rule of thumb banks will consider
1. 80% of your rental income
2. 30% of your gross salary
3. 50% of other investment incomeThe 80% is taking into consideration costs and vacancy.
Each bank/financial institution will vary, however that should provide an intial estimate of your income that the banks will take into consideration for serviceability.
The other mortgage brokers on this forum could provide more specific advice.
James
All the lenders do vary but they generally accept 75 – 80% of the rent. The rest is used as your outgoings.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
A lender called IMB will take 90% of rental income. They will also take external debt (i.e. debt with other lenders) at repayment amount. Most other lenders gross it up at a higher breanchmark rate. They are a good lender for borrowing capacity for investors.
Cheers
Stu
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