Being a guarantor and IP

Hi guys,

If you become a guarantor for a student loan of around $15,000, how or will this dramatically affect my ability to borrow for my first IP?

I already have a PPOR mortgage and plan to buy my first IP mid 2010, just wondering what the bank's decision will be when I asked to borrow money for an IP through my equity and then borrowing the rest of 10-20% from the bank to finance the loan.

Any advice?
 
The bank will count the $15,000 as if you have the loan (you are, in effect responsible for it). So your borrowing power will decrease. Same as if you have a credit card. They look at the total amount you COULD borrow (not how much is on it).

I hope you don't mean you are using your equity for 80% of the loan and borrowing 10-20%. You'll no doubt have the PPOR and IP cross collaterised if you do that. Mightn't make much difference now but it will if you want to sell the PPOR.

You'd be better off borrowing 80% and using your equity for the 20% + costs.
 
The bank will count the $15,000 as if you have the loan (you are, in effect responsible for it). So your borrowing power will decrease. Same as if you have a credit card. They look at the total amount you COULD borrow (not how much is on it).

I hope you don't mean you are using your equity for 80% of the loan and borrowing 10-20%. You'll no doubt have the PPOR and IP cross collaterised if you do that. Mightn't make much difference now but it will if you want to sell the PPOR.

You'd be better off borrowing 80% and using your equity for the 20% + costs.

Can you give me some figures as to how much tighter my credit will get if I have this $15,000 loan attached to me being the guarantor?

No I want to draw equity of 10-20% from my mortgage and borrow the rest from a different bank to fund my IP.
 
It would depend on your LVR. I wouldn't say it would dramatically affect your borrowing power.

If you have lots of equity it may not make that much difference.

If it's that tight that the $15,000 would mean the difference between getting the loan and not then I wouldn't be able to sleep at night.

I like to have a buffer. I wouldn't like 80% LVR overall but I know a lot of people do borrow up to their limit. I'm conservative and just starting out so that's comfortable for me.

Why don't you go to a bank and ask what your borrowing power is?
Good luck.
 
It would depend on your LVR. I wouldn't say it would dramatically affect your borrowing power.

If you have lots of equity it may not make that much difference.

If it's that tight that the $15,000 would mean the difference between getting the loan and not then I wouldn't be able to sleep at night.

I like to have a buffer. I wouldn't like 80% LVR overall but I know a lot of people do borrow up to their limit. I'm conservative and just starting out so that's comfortable for me.

Why don't you go to a bank and ask what your borrowing power is?
Good luck.
Thank you. Will any bank do or my bank where I have the mortgage?
 
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