$30,000pa Gross - Can she get a loan?

[Brizza]

Asking on behalf of a friend a younger friend of mine who is keen to get into the property market:

$30,000pa Gross
Lives at home board-free with her parents
$10,000 saved over six months from her wages
Been employed for 18 months
Eligible for FHOG
18yo

Can she get a loan? And if so, how much?
Guarantor isn't really an option for her at the moment.

 

[Rolf Latham]

Hiya

Easy peasy

How much depends on other liabilities

ta
rolf

 

[Peter Parker]

Can she get a loan? And if so, how much?

From personal experience, and (i) assuming no debts, (i) the very high savings rate is sustainable and (iii) rent from the IP(s) cover most costs, at least $200k isn't unreasonable.

Peter

 

[Qlds007]

As Rolf states liabilites including credit cards / store cards are important.

 

[Brizza]

Thanks for your responses.

She has no credit/store cards, no personal loans or anything like that and a clean credit record.

 

[Rolf Latham]

Hiya

yes, but shed run out of puff at around the 160 k mark

ta
rolf

 

[Brizza]

200k house out of the question?

 

[Rolf Latham]

Hiya Brizz

As an owner occ, 190 k lend would see her making IO repayments of 1060 a month.

Shed only take home 2000 a month, so her DSR would be well over the 50 % mark, not something a responsible lender would do

Now if she will rent it thats a diff ball game

ta
rolf

 

[Brizza]

So lenders will take into account anticipated rental income?

Would it be better to have signed rental agreements with people when applying for the loan?

 

[Rolf Latham]

Yes.

if she buys for rental they would consider the income BUT

No FHOG and no stamps (NSW) exemption.

Shed have to scrape up a lot more deposit through gift etc

ta
rolf

 

[Brizza]

What about if she was living in the house and renting individual rooms out?
Afaik, that passes the occupancy requirements of the FHOG.

 

[Rolf Latham]

Hiya

Good luck with the LMI people though.

Maybe if she had a lease, chicken or the egg though isnt it this one.

ta
rolf

 

[Brizza]

Yeah, a bit tricky.

U reckon with a signed lease to lease out a room at say $100 / week, she would be able to get 200k?

I'll have to explain to her that to get the loan, I'll have to move in with her

 

[skater]

What if she bought her house @ $200k & rented it out, BUT it had a granny flat that she lived in herself. Would she then get the FHOG & stamp duty exemptions PLUS the larger loan as it was an IP as well as a PPOR?

 

[farone]

Get her to approach the bank to get an investment loan, then they will take into account the anticipated rental return (of the whole house and not just one bedroom). Then get her solicitor to apply for FHOG - dont do it through the bank.

then she will have to move into the property to satisfy the FHOG requirements. She should only do this if she is confident she will be able to meet the returns. Food for thought.

 

[Rolf Latham]

Hiya Far

Gets around the serviceability but not the capacity to complete.

lender will want to see funds for deposit and stamps.

There are likely other ways to get her into a property, especially with some limited family help. She could have a chat with a good independent mortgage broker.

ta
rolf

 

[Brizza]

Thanks for all your replies.

In the situation where she rents a room out but still lives there, would the lender accept that as future expected rental return as well as being eligible for the FHOG + no stamps? or do they want a clear cut either investment loan / owner-occupier loan?

 

[Simon]

Thanks for all your replies.

In the situation where she rents a room out but still lives there, would the lender accept that as future expected rental return as well as being eligible for the FHOG + no stamps? or do they want a clear cut either investment loan / owner-occupier loan?

Don't get caught up too much about investment and home loan. They are almost identical.

Most lenders will need the property to be either leased or not. A single room rental being accepted is rare - I have had only one deal where it was.

If serviceability is an issue she can buy it as a rental property with a real estate agents rental appraisal letter to show the extra income available to service the loan.

Should her circumstances change at settlement and she decides to move in - well such is life...

 

[malpass]

Hi All,

Wouldn't it be too risky to tell the bank that the purpose of the loan is for investment and therefore consider rental income, reason being lenders will request the original stamped transfer at settlement which will be stamped exempt.

If the settlement clerk or bank officer picks this up what happens if he advises the lender/loan writer, they ask questions and decide to recall the loan or not proceed because it falls over due to serviceability or because customer has not disclosed correct information, customer loses deposit and is probably sued.

Or am I being a bit paranoid.I can't see how the conveyancer or solicitor can amend or change the stamping especially after the lender collects the transfer at settlement.

Malpass

 

[Simon]

You are probably right.

However it is her property to use as she sees fit and situations seem to change a lot where these things are concerned.

I am not suggesting anyone tells fibs to a lender.

Cheers,