Mick KennyMember@mick-kennyJoin Date: 2011Post Count: 2
Hi guys I would like some help or steering in the right direction.
I want to start an IP with positive cash flow properties but I don't have the savings for a deposit yet.
I am self employed and my wife works part time. We have two young kids. Being self employed I have a low taxable income so combined with my wife's our taxable income would come in at around $70-$80 k.
Our mortgage on our home is approx $220k and the market value at present is around $450-$500 k. So we are sitting on a lot of equity.
We have little personal debt.
Is there an easy way to access some of this equity for a deposit on an IP or would we be laughed at because of our low taxable income. Or should I concentrate on saving my butt off instead.
Thanks in advance
MickdezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16
I've got the exact same living scenario and finances as you (self employed, part time working wife, dependants and 220k mortgage with little savings)
Depending on what you want to buy, I suggest seeing a broker as they will break down what you can afford and see which lenders would bite.
I'm currently going through an application for a rural property investment and even though I had to jump some major hoops, 2 lenders didn't see a problem, just needed to provide more details and projections.
Hope that helpsRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Welcome to the forum and I hope you enjoy your time with us.
Making a few assumptions and running some quick numbers on what you would likely buy i think you certainly would be able to restructure your existing borrowing to allow you to release equity and purchase at least 1 IP (maybe more).
Course would need actual figures and breakup but certainly have done harder deals.
Yours in FinanceMick CParticipant@shapeJoin Date: 2010Post Count: 1,099
70k combine income is decent and is enough to draw out some equity…and given your trying to buy an IP – that's $15-20k worth of rent that you can add on to the cal ( for the new loan)Mick KennyMember@mick-kennyJoin Date: 2011Post Count: 2
Thanks guys, you have given me some more things to think about. I will start searching more seriously for an IP and keep a watch on the market.
MickJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
As others have said – it looks like you'll be able to purchase an IP. There might be some add-backs from your business that can improve your overall borrowing capacity too.
I just set up an equity release and IP purchase for a fellow forum member in a very similar situation to yourself in terms of employment type, income and available equity – so it is possible.
JamieRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Mick before you rush out and start looking for a new IP i would get your Broker to restructure the loan so that you have access to a sub loan too allow you to draw out the required deposit and also a pre-approval so you have confidence on what can be achieved.
Not every lender will consider your set of figures the same so you want to position yourself to enable forward progression.
Yours in FinanceColin RiceParticipant@fmsJoin Date: 2011Post Count: 338
Yep, get your finances in order first as per Richards advice or you will end up putting unnecessary pressure on yourself and the broker.
If you don't have many debts then looks doable to me.