All Topics / Finance / If you are not working, how do you obtain finance from lenders?

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  • Profile photo of amabellimamabellim
    Participant
    @amabellim
    Join Date: 2008
    Post Count: 2

    Hi everyone

    I have talked to a few banks and I posted this question to them:

    "if you are not working, would you be able to provide me with a loan?"

    The banks that I have talked to have said no.

    So, how does it work if you want to stop working and just go full time into property investment?

    How do you borrow money when you don't have a job?

    What if you already have a huge property portfolio and you stopped working, don't tell me they won't lend you money because you don't have a job?

    Thanks!

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    Well if you have a huge portfolio, you have a lot of rental income and hence they may be happy to lend.

    If you have no portfolio and no job, you have no income and they won't lend you any money. And fair enough too.

    Cheers,

    Stuart

    Profile photo of amabellimamabellim
    Participant
    @amabellim
    Join Date: 2008
    Post Count: 2

    Hi Stuart

    Thanks for that.

    So, does that mean that by the time you have a good sized portfolio, you would have private bankers that know how you work and would probably be more willing to lend you money?

    And would the general rule mean that you actually need to be working for a few years before stopping your job?

    Because, some bankers were telling me that rental income doesn't count towards their 'servicing criteria'. =os

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    You don't need a private banker when you have a large portfolio, just a great broker! :)

    If you only have rental income, then lenders can have issues with that because you become "rent reliant". However, there are other mitigating factors like, low LVR, multiple properties = good exit strategy, etc. There's no set formula – my case by case.

    However, in the meantime, keep working!

    Cheers

    Stu

    Profile photo of vinnykvinnyk
    Member
    @vinnyk
    Join Date: 2008
    Post Count: 1

    Stu,

    Does that mean that if all our income were derived from rental income, capital gains (accessed via LOC), and/or stock market investments – we would only be able to obtain finance via lo-doc loans? Thus, also requiring at least two past tax returns?

    Is there a way to set ourselves up in a way that all our income would be classed as suitable for conventional financing? E.G is it possible to set up your own company to earn all the income (via streams mentioned above), and then employ yourself so you technically are employed with a salary for "loan serviceablity"?

    Your expertise is greatly appreciated.

    Vinny

    Profile photo of CanberraClaireCanberraClaire
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    @canberraclaire
    Join Date: 2005
    Post Count: 47

    One way we are planning for it, to make life easier, is to have portability on our loans.
    This works so that if you sell a place, you can 'port' the loan to another place without having to go through all the form-filling rubbish all over again. Again, ask your broker, but this is what we've done.

    CanberraClaire | Capital Buyers Agency
    http://www.capitalbuyersagency.com.au
    Email Me | Phone Me

    Exclusively for property buyers

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi there

    Yes a Nodoc style loan would assist in this situation whereby income evidence is not available.

    On the portability front this is possible however with a securitised loan the purchase and sale settlement dates would need to be simultanous as you cannot use a term deposit account as security.

    I agree form filling can be a pain sometimes.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of Joseph12Joseph12
    Member
    @joseph12
    Join Date: 2008
    Post Count: 57

    You would be classified as a full time investor by the lender .

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