Hey guys,
We are looking at getting our 2nd IP in Melbourne and currently having problems with finance. Both our PPOR and IP are under my dads name and we spoke to a broker working with RAMS, which is a part of WESPAC. He said our situation is tight but me and dad feel we can afford the monthly repayments at ease.
PPOR $200,000 owing and worth approx $650,000
IP1 $600,000 owing, worth approx $750,000
I'm currently studying full time and have been working casually at a company for 2 years, low income. Dads been an accountant at a hotel for roughly 10 years and has a secure income of approx $70,000.There is no problem on the repayments of our IP as it is rented out to students per room and currently returning $5500 p/m, but its cash. The broker said our PPOR is linked with our IP for security reasons and that it would be hard to get another loan. Also, the broker said that our IP was bringing us down heavily because it is rented out privately with no contract or documents to prove, this is understandable but with the rent were getting, why would we want to rent the whole house to a family for 450-500p/w. We want to get another property around $500-000 – 600,000 hoping to do student accommodation as well.
I'm thinking of going to another broker or bank to check out our options, what do you guys think?
Would it be any easier if we borrowed overseas money to pay off our PPOR then get a loan higher than the value of the house and pay them back? Is that do-able or would it make any difference? I asked the broker but he said best thing would be to put a 20% deposit with that money, but he didn't understand that I would need to pay our relatives back ASAP.Any advice is appreciated, PLEASE HELP!!!
Cheers
DanWhen you say the rent is 'cash', is it declared on a tax return? Can you show a tax return that verifies the income you are receiving from the first IP.
If the rent can't be proved, it doesn't exist.
If the rent is from students you can still do up agreements as proof to show the bank. You can also deposit the rent yourself (once the give it to you) and give them a receipt.
Declaring it would also help.
There are many, and I would say, more opportunities to create wealth legitimately. I have many clients that come to me that do not pay tax. My response is always the same….. Where you save a dollar in tax, you lose hundreds of thousands in loan capacity. Loan capacity creates wealth. Without the ability to leverage, wealth creation is restricted.
blackhotel: thanks mate, ill give it a shot.
number 8: that is so very true.
Black
Thing you are living in the past my friend.
Cant think of too many lenders where you dont actually have to declare an actual income on a lodoc loan these days.
Richard Taylor | Australia's leading private lender
I've just got refi documents with me now and I am signing the declaration that I can afford to make the payments. The refi is with RAMS. Also, I do have a history with Rams, maybe that's why.
It is always an issue with student accomodation. I don't think the bank will follow the actual income. I believe that student accomodation is fluctuate (i.e. high turnover and not full 12 moths).
Bank always used the market value to estimate the rental income ( to be realistic)
duckster: The relative is now in Australia lol, i just thought if i paid off my PPOR it would make it easier with banks to get a loan.
blackhotel: The broker i spoke to mentioned nothing about a lo doc loan to me and dad, maybe ill speak to him again. Thanks
god_of_money: Yes your right, it is always fluctuating. Luckily since we bought the house it's always been full of students and when one leaves, another comes straight away.
I recently spoke to my friend working in lending with ANZ, he said with lo doc loans u don't have to prove any income, just equity of your properties and something about 60% =S.
60% LVR. Means they will borrow up to 60% of the value of the property. Actually I just got alow doc loan through ANZ with a 60% LVR and your right I did not have to prove my income . The rate was 6.7%, just as good as any full doc loan. It's going to be a flip so 60% LVR no LMI was fine with me. But the BEST thing was not going through all the hoops of a full doc loan. Low Docs loans are AWESOME! If you want 80%LVR then you need to pay LMI. A small price to pay for better wealth!
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