100% investment loans

[Booboo]

Does anyone have any advise on obtaining loans when you have run out of sufficient equity and servicability to obtain further loans, even when the property is very positive cash flow??

Is there any 100% or 106% lenders left out there still operating in the current climate?

Any suggestions would be great.. tis very frustrating...

 

[Nathan]

credit card+95%

 

[troyhunt]

you have run out of sufficient equity and servicability to obtain further loans

That'll be your sticky point. Remember lenders don't tend to be as optimistic as you might be when calculating servicability. I forget the exact figure but I think they generally work on something like 80% of estimated property income. Probably focus on the aspects of improving your own servicibility, I think there are a few threads around dedicated to this.

 

[joeExpat]

credit card+95%

Sounds like a recipe for disaster. Does anyone actually do this ?

 

[Nathan]

Sounds like a recipe for disaster. Does anyone actually do this ?

Done it a few times, its all money, as long as the cashflow works, why is it a disaster?

 

[joeExpat]

If you're stretched so much to use a credit card for a property purchase you're living on the edge & paying 20% cash advance interest, + all the extra fees for taking a loan over 80%.
No margin for error and likely a significant -ve cash flow in todays market.

 

[JamesGG]

Hiya,

Joe, I may be preaching to the converted and I apologise if you are in a much better situation to judge than I am. But, would you not be better off asking *HOW* such a finance structure can make money, rather than assuming from the outset that it won't...?

I know Nathan has done very, very well in the last few years. Clearly, it works for him.

The first thought that I had in reading his post, was something about those ads for 0% interest on balance transfers...

Cheers

James.

 

[boomtown]

You would want to be damn sure of your tenant's ability to pay and your ability to find a suitable replacement tenant should they fall over (ie vacancy rates).

One way to get around cashflow restrictions is to rent out your PPOR and purchase the new property as a PPOR - you pay less stamp duty and a lower rate of LMI. I make all my purchases this way and move in for 12 months. It shouldn't affect your serviceability if both properties can achieve similar income. However given you have said its strongly cf+ I doubt its a typical residence.

 

[Rolf Latham]

Being equity AND serviceability bound will make that a tough gig.

In a lenders eyes, positive cashflow is a gross return of between 13 to 17 %..........

ta
rolf

 

[BayView]

Simple.

Use the current pos cashflow (and tax returns) to pay down the existing debt until the equity and the servicability improve enough to buy again, then buy again.

Until this situation occurs; you are living very dangerously to buy now.

 

[Nathan]

Thanks for the kind words James.

Joe, firstly its 12.5% flat interest on a lot of cards and is for a small amount sat 5% deposit or stampduty etc...

so say a 200k dwelling, 5%deposit is $10k

secondly the credit card interest is approx 4% higher then standard variable loans at present so your looking at say $10000 x 4% = $400pa extra interest per annum or $8 per week.

if its going to cost me $8pw extra to use credit card and my cashflow cant support it then shoot me down. when you see the deals out there going through @ $50+k less then market value you know how it can help.

I guess its all about the 6 inches between our ears, and how we train it to think. @ the end of the day, it is all money and as long as the cashflow works out then its fine.

as for this being done all the time, no i only use it in hairy situations but it will not stop me from doing it on any deal because it is plain mathematics.

Getting back to the original question can you get 100% loans? well i know nearly every lender will lend 95%, and i know almost anyone can get a 10k credit card.

Its all about thinking outside the square.

Goodluck.