Forums / Getting Technical / Finance / What is my borrowing power?!!!

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  • Profile photo of BozenaBozena
    Participant
    @bozena
    Join Date: 2008
    Post Count: 9

    Me & my husband really want to buy another investment property we currently have two properties: Our home & our unit which we rent out.  How do you figure out yourself an approx estimate of how much borrowing power we have based on our salary & existing loans & debts without going to a broker?  Anything help is appreciated!!!!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Hi Bozena

    Firstly i promise us Brokers dont bite so nothing to fear by approaching one.

    There are many factors that effect your capacity to borrow so it is not as easy as it sounds however to give you some idea:

    Add your net monthly incomes together with say 80% of the current rent or proposed rent.
    Subtract the Prinicpal & interest repayments of all of your mortgage loans calculated at 1.5% above the standard variable rate together with the actual repayments on any non mortgage loans such as personal loan etc. Also subtract 3% of your credit card limits.

    Then subtract a living allowance based on the number of adults and children in the family. This is a sliding scale so you might want to check with the Henderson Poverty Scale as to what applies to you. As an example 2 adults and 2 dependant children would be circa $2050.

    This will hopefully give you a net surplus figure.

    Work out the P & I repayment for $1000 on the SVR + 1.5% and divide this into the net surplus figure you have.

    This will give you the number of 000's you can borrow.

    As i mentioned there are many other factors to consider such so will only be a rough guide.

    Altenatively talk to a Broker as i say they dont bite.

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

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

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

    For just a quick ball park figure = you can borrow in total roughly 6 times your annual incomes.

    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 MortgagePlusMortgagePlus
    Member
    @mortgageplus
    Join Date: 2008
    Post Count: 83

    Is that a rough ball park figure when I have 3 credit carda and a novated lease coming out of my salary, or without.

    I prefer to go with Richard on this one, and ACTUALLY find out the figures before hazarding any kind of random guess.

    The details are what makes it fun.

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

    Yes, its rough!

    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 BozenaBozena
    Participant
    @bozena
    Join Date: 2008
    Post Count: 9

    But I also dont want to change my two existing loans with the bank I would get a new loan with I am sick of doing that & I lose money each time I change.  Anyways it's not that easy cause my husband has his own business aswell…………..I usually do talk to a broker my broker which I always deal with is awsome but sometimes I feel like he gives up too easy if you know what I mean cause I asked him a few weeks ago & he told me straight out that I am dreaming & that we have even borrowed over the amount which we would normally be allowed to borrow, but it's not fair cause I know we can do it easily financially there has to be some kind of way!!!!  Oh plus he said that we have used pretty much up all of our 80% & only have something like $50,000 in equity.  Maybe it's just not mean to be any of you guys from Brisbane?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Hi Bozena

    I am based in Brisbane but am not here merely to tout for your business.

    From what you have mentioned it sounds like your existing loans have been done on a lodoc basis.

    Your Broker is correct that 80% LVR is probably the maximum you can get on lodoc these days (although the choices there are disppearing by the day) . Unfortunately not all mortgage brokers are property investors and therefore do not fully understand a clients needs or requirements.

    You can always bounce some figures off me if you wish. I do have one or two happy forum clients on board as a reference.

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

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

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