Hi All,
I’m just starting out in the “Positive Gearing” arena, after following the negative gearing train and subsequently entrenching myself in the employment world. I am interested in feedback on when various financial institutions will lend you money on the performance of your investment company as opposed to relying on you being “Gainfully Employed”? Do they base their judgements on cashflows, LVR’s, proven history, professionalism of approach or a combination of the above?
Cheers
Craig
Craig banks dislike lending on residential purley on the figures, until you either have a huge amount of properties (say like Steve McKnight has), or you have alot of equity (like a coupme of million)/large scale developments/cash. There are ways around (i.e. company in another spose name that employes you , 20%+ deposit, etc).
That being said the bank must see you as a professional player before it hands over it’s money.
Rgds.
Lucifer_auDefinately a combination of the above.
Basically, you would need to be able to stand alone as a self employed investor, and the income that the company makes would need to be able to service the loan.
UNLESS the LVR allows you to structure your debts as ‘lodoc’.
History, professionalism, approach etc – do not hurt your applications chances, but they are only considered as comforting factors – may sway an assessor if the loan is tight.
RegardsAs a professionals Investor, you would be considered self-employed, therefor needing 2 years minimum financials that show your income able to substantiate your living expenses and your loans.
ie. replace your income with investment income.For a trading company, you would need the same financials showing good incomes for 2 years minimum, the same scenario as above, but in a company format. You would be the directors, I assume. The bank would need to see drawings to cover your own living expenses, with enough retained profit to continue trading and service debts. They will still require you to provide Directors Guarantees.
Of course they will load interest rates and reduce the rent to be used in serviceability.Perhaps an accountant or another mortgage broker would also care to comment.
Michael O’Brien
Adelaide Mortgage Professionals
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