I am currently living in the UK, i expect to come back with what will be 100,000 australian dollars (love that exchange rate) and i will be looking at investing in some IP. I have always been self employed in australia and my last 2 years have only earned probably 15000 and maybe 20000 as i had alot of tax claims with my work also. What will a lender think of me, i would like to buy 2 houses with my money but if they will only lend me for 1 cause of last 2 yax years then i will do it. Advice will be much appreciated.
cheers
If you only earned 15k and 20k ‘GROSS’ in the last two years, and you tell them that, they will probably not think very much and they may also ask where you got the 100k.
Whether you can borrow or not will be focused on what you want to buy… ie: how much are the property values and their location.
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential Linksi am a tennis coach and was studying a little bit for last 2 yrs in australia. Working 50 hours plus a week in the Uk earning 2500 aussie dollars a week.I know my income wasnt great but i also own shares 15000 and never had bad credit. Say a house of 250,000 surely a 25% deposit would be ok?
2,500 a week is a lot. You should be fine. Of course, you could purchase under low doc or no doc if you have the income but not the documents to support it.
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential LinksI agree with what the mortgage adviser has said re: no doc as a path. There are a couple of lenders evolving in the Australian market who will do lends against declarations for PAYG or for self employed individuals.
A couple of things to be aware of though:
First is rate. If you are percieved as high risk obviously you pay more. The corrolary is that if you want to buy, there is someone who will lend to you. For eg one non conforming low doc can do 7.54% with one day old ABN, potentially up to 90% LVR (qualifiers relate to the changing nature of the industry).
Second is lend. Standard low docs come in basically two flavours up to 65% and up to 80% LVR. Up to 65% you can have a short lived ABN. Up to 80% you have to have an ABN >2years (generally). Non conforming providers consider outside these paramters however you will pay.
Finally is mortgage insurance. Depending on the size of the loan you are likely to pay some form of LMI. For eaxmple an 80% low doc would likely have a 0.7% impost for LMI. For the 7.54, 95LVR option the cost is up to 1.75% of the deal.
As always in this game though the specifics would come down to your deal. The bottom line though is that if you have a hefty deposit, legitimately have income that can service the loan and have a willingness to pay in proportion to your risk you should get a loan.
They should be able to take into consideration your UK earnings – do you have a UK tax assessment form you can show?
They will want to make sure you can service the loan, so probably a good idea to start working before you approach them – or get loan approval while still in the UK on your current income.
If the IPs are cash flow positive, then servicabilty won’t be such an issue as they will be covering themselves. A big deposit will obviously help maximise cash flow on an IP. You might even want to consider putting the majority into one IP for starters, and then leverage off it to purchase the second IP with less cash down (start off your bank relationship on very solid footing, and then squeeze for more).
A couple of things…
There is also PAYG low doc and no doc loan options so ABNs are not always required.
As for rental income, if it is positive cashflow, declaring the income should not be a problem as you can also include the expected rental income. If you commence a job in the same field before applying, the lender will only want to see that no probation period exists before settlement. You would go very close to a full doc loan.
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential LinksIf you come back here and start working at the same type of job as you had in the UK, you could probably qualify for a full doc loan within a short period.
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
Sounds familiar!
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential Linksthanks for the advice. I am self employed also in the UK and i will be starting the same job in australia. Interesting one about buying 1 house and then building equity and bank relationship seems sensible.
Don’t worry about a bank relationship. The market is too competitive and you will find yourself moving around a lot as they beat each other’s products.
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential Linksi am almost in the same situation as you, i have to wait for 1 year for my first tax assestment, before i can get a loan at 6.74%, otherwise, low doc, 8%, sound like the broker try to rip me off. so i don’t go for it atm.
There is low doc at 6.76% for 80% LVR and slightly lower for 60% LVR if you borrow more than 250k.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksMortage adviser, that looks like a good figure for me. 6.76%, if my broker/lender behave badly i might just go and look for you.
cheers
There is always the 95% LVR Low Doc but that will cost you around 12% in interest… OUCH!!!
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
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