TomParticipant@tom-reid1515Join Date: 2016Post Count: 3
Hi, yesterday i went to the bank to inquire about an investment loan for another property. I have about 200k in equity in my first house and 60k in cash. The place i was looking at is on the market for 330k and rented out for 430 a week with long term tennants…..(good buy) but the bank will only lend me 180k…..
As a rookie in this game, my question is how can you go ahead and buy 3, 4, 5 ….10 properties? I thought with a positive geared property and my numbers stacking up ok 330 shouldnt have been a problem?BennyModerator@bennyJoin Date: 2002Post Count: 1,325
I thought with a positive geared property and my numbers stacking up ok 330 shouldnt have been a problem?
I totally agree !! I think you might be about to find that a Mortgage Broker can come up with a WAY better result for you than most individual banks can. Of course, right now, we are firing blind as there isn’t any info re your income apart from rent. I am guessing that you have a reasonable income to be able to put aside $60k in cash.
Anyway, I have a lot of faith in the abilities of MB’s – so watch out for replies from one of them – there are a host on here, just check the signatures of any others who post a reply to you. They are Masters in choosing just “which bank” is the best to use first for an investor, and also the ones to use last – all because some lenders have differing lending rules than others.
Certainly, from the post you made, I would be very surprised if there wasn’t a positive result possible from somewhere. The Equity is a big plus – let’s see what the MB’s can offer re getting your DSR higher. A tete-a-tete with one of them could prove to be a goldmine for you.
BennyTerrywParticipant@terrywJoin Date: 2001Post Count: 16,110
just because a property is positive geared doesn’t mean it is a good investment. Banks will base their serviceability calcs with some stress involved – say 7% PI loan for all debts, 80% rents and large living expenses.
You could try different banks, but unless your salary is up very high you will have problems qualifying for finance after a few properties. there are ways to stretch it to a certain extent but it is still very hard these days.Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010
Just because your bank said you can only borrow $180,000 – doesn’t mean that all lenders will say the same. Any investor wanting to build a significant investment portfolio will need to have a strategic lending structure to ensure they maximise their capacity and factor in long term finance challenges which arise for investors. I’ve written about this previously here: http://www.precisionfunding.com.au/diversified-lending-structure/
Effectively if your lending is structured correctly it’s possible to generally increase your long term borrowing capacity by 1.9-2.5x greater than what any one lender would allow.Ethan TimorParticipant@ethantimorJoin Date: 2016Post Count: 282
Hi, yesterday i went to the bank to inquire about an investment loan for another property. I have about 200k in equity in my first house and 60k in cash. The place i was looking at is on the market for 330k and rented out for 430 a week with long term tennants…..(good buy) but the bank will only lend me 180k…..As a rookie in this game, my question is how can you go ahead and buy 3, 4, 5 ….10 properties? I thought with a positive geared property and my numbers stacking up ok 330 shouldnt have been a problem?
Is the $200k equity accessible by any chance?
Are you looking for 80% LVR or more?
The 430 p/w sounds great but most lenders take only 80% of it into consideration. Some will only accept a 6% yield on market value and then 80% of that (killing rental income).
I would suggest discussing your situation with a broker and see if and how they can help make it happen.
Where there is a will, there is a way. I’m sure of it.
Good luck! 😊JerryParticipant@jerry_oJoin Date: 2013Post Count: 46
As mentioned by my colleagues above. There are a lot of things to consider on the finance side alone in buying an investment property.
On a very basic explanation, lenders take in all your income (PAYG incomes, rental incomes, other acceptable income etc) less all your debts (mortgage, personal loan, car loan, credit card limits, hecs etc) to determine your take home income. From there, they will determine how much you can afford. Lenders then assess the take home income uniquely, some are more generous than others but most add in so much buffers to lessen their risk (adding in sensitized rates, assessing it at principal and interest repayment at 25 or 20 years etc)
Again that is just a very basic explanation of it, different lenders assess each deal differently. So best to speak to one of the brokers above and run through your situation with them.
JerryJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,065
but the bank will only lend me 180k…..
The best solution is to get a second opinion.
One bank can advise on their one set of policies and their one borrowing capacity calculator.
A good broker will be able to advise on dozens.
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