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  • Profile photo of nicolas_bnicolas_b
    Member
    @nicolas_b
    Join Date: 2009
    Post Count: 21

    Hello, My Brother and I are going to go half''s in a primary property November / December of this year. He has lived overseas for the last seven years and has no credit / savings record in Australia. I work as a contractor. (6 months contract, 8 months contract etc…) I earn very good money, however I have no job security. Our plan is to purchase an apartment around the $1.1 Million mark. We have $650k – $700K deposit. (We also have $50K to put aside to cover mortgage payments etc…). This extra $50k will equal ~18 months of loan repayments up our sleeves. Would we be able to obtain finance? Given the fact that I am a contractor and my brother might not of found work when he returns to Australia in September? We have to have the property in both of our names. I understand that we will most probably not make any money. This will be the last opportunity we will have to live together before we both settle down, get married, start a family etc… 
    Any advice much appreciated, Thanks.

    Profile photo of nicolas_bnicolas_b
    Member
    @nicolas_b
    Join Date: 2009
    Post Count: 21

    Are Low Doc / No Doc loans still available?

    What are the requirements?

    Minimum deposit / Maximum deposit?

    Would someone qualify $650 K deposit, ($50K to be set-aside for mortgage payments) borrowing $400k.

    Profile photo of colinnewlandcolinnewland
    Participant
    @colinnewland
    Join Date: 2006
    Post Count: 128

    I suggest that you mak ethe application BEFORE he returns to AU, that way he can prove his income from his present employer….hard but much easier than with no provable income or credit rating in AU.
    As for using the entire nest egg in one basket…think again…see if you can buy several smaller investments properties using the min bank deposit….say 20% plus fees.
    The banks will allow you to claim 70-80% of the other sources of income to pay off the debt but only allow you to use 30% of your current income. It also allows you to leverage the assets to a far greater extent.  ie: 20% of an average $400K investment property allows you to do the following: $80K plus 5% fees on $400K = $20K = $100K x 6 to 7 investment properties. This allows you to 'control' property worth 2.4 to 2.6 million. With an average 7% increase in each property valuation per year on the entire 2.4 to 2.6 mil = $168,000 to $182,000 increase in valuation. Use this increased equity as a 'deposit' on another investment property every 7-8 months. Let the rent pay off the loans as the valuation increases each year.
    Start small, one to two properties to let the bank get used to the idea.
    Do NOT buy the property you live in, rent it for 6 months, its cheaper than paying a mortgage and allows you to keep your investment cash in hand.
    Do NOT be affraid of debt; debt allows you to leverage your cash at 5 to 1 (using a 20% deposit with an 80% mortgage).
    Have your brother scout for additional properties that you can add value to: renovation or inprovements (car port, pario, add a bedroom internally). If you buy then rent a property every 6-8 weeks (at a min; more likely 12 to 16 weeks, you will have your 6 investment properties within 36 to 72 weeks AND you will have added value to every property as you renovate it before renting them out.
    Make sure they are revalued every 6-12 months depending on the local market…this allows you to dip into the increased equity to buy another investment property.
    Keep working and earning cash, the banks like that, while your brother cordinates the renovations, with your assistance on the weekends and nights.
    Within 2 years, you should have at least 10 x $458K investment properties (7% increase x 2 years) = $4.58 MILLION under your control. Your debt should be approx 6 x $300K plus 1 x $332K (using a price increase of 4% every 6 months) plus 1 x $346K plus 1 x $360K plus 1 x $375K = $3.213 million. Thats a increase in valuation/net equity of $1.367 MILLION over 2 years. Not bad on an initial investment of $600K.
    Thats a Cash-on-Cash return of 227%. 
    Hope this starts you thinking BIGGER.
    At the end of 2 years, all you wil be doing is buying investments properties :) and using the POSITIVE and PASSIVE income streams to live the high life. Best of luck.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Maybe get some structuring advice from a lawyer too before committing.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I would advise people to be very careful when dealing with overseas "lenders". Often these "lenders" string people along with promises of finance. They collect all of your personal documents and then 'assess' you. You will nearly always be approved subject to paying a fee of some sort. Guess what happens when you pay the fee?

    Then consider they have all your personal documents, including identity documents!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Glad to see the post by the overseas "lender" has been deleted!.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of ksherwellksherwell
    Member
    @ksherwell
    Join Date: 2007
    Post Count: 125
    nicolas_b wrote:
    Are Low Doc / No Doc loans still available?

    What are the requirements?

    Minimum deposit / Maximum deposit?

    Would someone qualify $650 K deposit, ($50K to be set-aside for mortgage payments) borrowing $400k.

    With such a high deposit, you could do Low-Doc, Rams is the leader in this market up to 80% LVR or go to one of the majors.  You will need to be referred to credit management to be approved.

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

    Sorry i disagree there are several better products around than the Rams Lodoc.

    With one of the majors Lodoc is still a standard product with no requirement to produce Trading statements, BAS or indeed Accountants letter of income confirmation unlike RAMS which require 2 out of 3.

    In saying this of course i am not convinced you actually need to go the Lodoc route as with ongoing contract work you should be able to go full doc at such a low lvr and with consistant Contract work.

    Many Brokers and indeed lenders encourage Lodoc as they feel this is the easier way forward however under NCPP the requirement to ensure the loan affordability can be demonstrated has meant that documentation is still required so why not get yourself a better overall deal.

    Cheers

    Yours in Finance

    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.

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