how much will the lender give?

[perfect]

I am curious as to how do the lenders analyise how much they can borrow an individual?

I know the person's salary, spendings etc count, but when doing an application,
Is it based on the deal (how negative or positive the income is)?

[Ray Brown]

I am curious as to how do the lenders analyise how much they can borrow an individual?

I know the person's salary, spendings etc count, but when doing an application,
Is it based on the deal (how negative or positive the income is)?



Hi Perfect,

The rental income is important.

you could search this forum and find plenty of info on this subject.

However, in my experience, a bank tends to take lots of things into account, including the loan term, type (interest only, principal and interest), number of dependants, type of car(?) and your estimate of outgoings etc.

Two things are fairly important though. Debt service ratio and Loan to Valuation ratio.
A bank may work out your DSR by adding 70% of the expected monthly rental to only 30% of your gross monthly income. This might be how much you could afford in monthly repayments which would limit the borrowings.
The other LVR limit might be determined by comparing the value of your properties compared to how much you owe on them. The bank might only lend you up to 80% of the total value.

cheers

[geoffw]

They're mostly based on two things

1. How much you're borrowing vs how much the security you're using is worth. Typically they will lend to 80% without using Loan Mortgage Insurance (LMI).
2. How much you can afford to repay- servicability.

Positive or negative will probably only influence point 2- and even then, probably not much- they may only take 75% of rent (for instance) as income. Different lenders count different sources on income in different ways.

[Rolf Latham]

Hiya

Its been pretty much covered in the replys before me.

Whats worth taking onto note that the diversity of what you can borrow is enormous based on all those variables mentioned.

Any mortgage broker would be able to give you a broad brush, a good one will be able to eek out all those little extras that can make or break a deal.

Ta

rolf