All Topics / Finance / Home Loan Question?

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  • Profile photo of sarahj1988sarahj1988
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    @sarahj1988
    Join Date: 2011
    Post Count: 2

    Hi guys,

    I'm highly interested in a property that I like and have made enquiries with my local bank Commonwealth and have had a pre approval for an investment property.

    I am earning $63k a year and the property costs about $470k. I have a 20% deposit ready to put down so would need a loan for about $380k

    The bank will only give me enough money if it is for an INVESTMENT property, but I plan to live in it for 6 months to get the FHOG and renovate it a little bit. To the bank that is not considered an investment property and won't give me an investment property loan??

    How do I get around this situation. My friend said once you get the loan they can't do anything??

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Free to Bee

    Welcome to the forum.

    You could always go to another bank who is willing to lend more. CBA don't rank that high when it comes to the amount you can borrow – other lenders have much more generous borrowing capacity calculators.

    A broker could run a quick borrowing capacity calculation on your scenario and offer advice.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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

    If you only want to live in it 6 months and then rent it then it would be an investment loan

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of maree_bradrossmaree_bradross
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    @maree_bradross
    Join Date: 2007
    Post Count: 401

    sarah – I don't think your figures are including stamp duty?

    Profile photo of ColiColi
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    @coli
    Join Date: 2009
    Post Count: 19

    Hi Free to Bee,

    I just had a similar situation with a client and CBA and because the client was claiming the PPOR (Principal Place of residence) deduction for stampduty then the CBA would not allow gearing to be used for service as an investment loan. The way we overcame this was for the client to not claim the PPOR deduction until after settlement. Which in Victoria you can do for up to 12 months after settlement.
    Depending on your state, check the rules and you may be in the same situation. Once we did this the CBA were happy to treat as an investment with all service calculations associated such as gearing and rental addback to be allowed.

    More than one way to skin a cat.

    Cheers

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

    As Jamie has mentioned a Broker might be the way to go as it costs you noting to have someone review your situation and suggest a variety of lending options.

    Of course providing a rental assessment on the property in order to boost your serviceabiliity when you intend to occupy the property for your own occupation(even for the first 6 months)  is actually mortgage fraud so not recommended.

    CBA are certainly not on the top of the serviceability list so a second opinion would be the way to go.

    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.

    Profile photo of ColiColi
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    @coli
    Join Date: 2009
    Post Count: 19

    It is not mortgage fraud if the property is moved into and partially let to boarders/tenants with an appropriate lease put in place and the lender accepts these leases as servicible income and accepts the well explained and documented application to support why servicing is evident. When you discuss with the credit assessor in the credit department at the chosen lender about the situation so he understands your case and allows an otherwise marginal service case that may be initially rejected by the lender to now proceed.  Also, while one lenders servicability calculation may be lower than anothers, a lender that can 'Look outside the square' is also important in getting some applications approved, it is not always just about servicability. If that were the case then everyone could just do their own applications and we as brokers would soon be out of business. If the person buys the property as a PPR and does move in as their PPR under these circumstances and all income for the rental is also accounted for then what I am saying is that there is more than one way to skin a cat!! Under current laws the applicant can then within twelve months also clainm that PPR reduction if they do choose to stay in the property.

    Under these curcumstances setting up a loan as an investment initially is totally legal and it leave options for flexible future decisions.

    The preparation of your application, provision of a good explanation with all supporting documentation largly will determine if approval is gained or not.

    Profile photo of ksherwellksherwell
    Member
    @ksherwell
    Join Date: 2007
    Post Count: 125

    Go to another Bank, there are many options out there

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Qlds007 wrote:
    Of course providing a rental assessment on the property in order to boost your serviceabiliity when you intend to occupy the property for your own occupation(even for the first 6 months)  is actually mortgage fraud so not recommended.

    CBA are certainly not on the top of the serviceability list so a second opinion would be the way to go.

    Agree with Richard.

    As mentioned, CBA aren't one of the highest ranking when it comes to serviceability. It's simply a matter of matching a lender that caters to your situation.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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

    Hi Colin

    You might want to check the First Home Owner Grant / Concessionary Stamp Duty rules when you go down that route.

    I agree if the lenders accepts the fact that you partially tenant the property then using the rental income for serviceability is fine.
    What i was pointing out was that to use rental income to convince the lender yet then separately move in and claim the FHOG and SD Concession was Mortgage Fraud.

    Yes there are many ways to skin a cat and when you do the number of deals i do each year you have seen most of them but there is a difference between doing it legally and not.

    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.

    Profile photo of ColiColi
    Participant
    @coli
    Join Date: 2009
    Post Count: 19

    Hi Richard,

    While I don't want to get into a tit for tat here

    You may note in my responses that I made no mention of claiming the FHOG, obviously the client would need to make choices about if he where to claim the FHOG, if he was going to stay in the property, if he could claim the PPR, if he did renovate and move on, if he did decide to stay. My point was that if you talk to people outside the lenders direct that you can discuss many ways 'To skin that cat''. My objective is to find a client a solution to their problem LEGALLY and inform them at the time of meeting of all the options and all the ramifications of those options. The point was to stimulate thought, which is what these forums do obviously.

    As you say, when you do the number of deals you do then you would know this of course and I respect your wisdom. Sometimes though you have to do the same, I have been a Top 100 broker nationally for many years, run a group that settles approximately $300M in mortgages annually and has been in finance since 1991 and for the last 2 years have been rated the top 20 brokerages nationally. Acknowledged for its ethics, morals, treatment of clients and customer service. We look outside the square and find solutions. LEGALLY.

    As i say Richard, I respect that you are an experienced broker who has been posting on this site for some time. But I do take offence at insinuating that anyone, including myself, may do something illegaly.

    Regards

    Profile photo of ksherwellksherwell
    Member
    @ksherwell
    Join Date: 2007
    Post Count: 125

    I would go to another bank.

    I can't see a problem.

    Profile photo of rukruk
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    @ruk
    Join Date: 2008
    Post Count: 21

    I don't think the FHOG actually stipulates how long you have to live there to claim it, all you have to do, after you get it is say you intended to live there but found that you could not afford to after all, also as far as an investment loan goes, you just tell the bank that it took longer than you thought to find a decent tenant.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    ruk wrote:
    I don't think the FHOG actually stipulates how long you have to live there to claim it, all you have to do, after you get it is say you intended to live there but found that you could not afford to after all]

    You'll find it generally states 6 months. I would be careful with this approach – some people get caught.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

Viewing 14 posts - 1 through 14 (of 14 total)

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