Chances of getting approval.

[joltz]

Hi guys, I have a small problem, ive had bad credit for a while, but in reality it has never bothered me because my family is quite well off, im in a decent job that really helps me pass the time and im quite good at saving.

However, Im thinking of changing my circumstances and this is what I now face.
I had a 37k judgment on credit file, i settled it for 18k a few months ago and I have 2 paid defaults both utility bills for approx $500.

My father has offered me a business property, which he no longer wants to look after, it has a 3 year lease with a 3 year option (so pretty much a 6 year lease), the tennant pays rent of around 2.4k a month and it increases every year with CPI.
The property with the tennant in the lease is valued at around 300k however my father said he will give it to me for 250k.

I dont want this property to leave our family either and Id rather buy it, Im pretty sure that a 250k loan to buy this, the rent alone is more than enough for the repayments.

I have no deposit as I decided to pay my defaults and spent a few k on a recent trip to China, I currently earn a shade under 50k from work, is there any chance I can get a loan for this from any lender/broker?

If so, where do I start?
Many thanks

 

[Rolf Latham]

Hiya Joltz

Welcome !

Putting aside the credit issues for a moment and lets assume u are a clean skin, the max lend on average for a 300k commercial would be around 195, based on a 65 % Loan to value ratio.


On that basis Id suggest we would have a challenge

ta
rolf

 

[jaycee]

Hi ya Rolf,

Is the lvr THAT tight ?

Even with more than enough rental income to cover their loan ?

Is LMI an option ?

Sorry, not to hijack the current topic off course, but curious to know "the basics"

 

[Rolf Latham]

Hiya JC

Commercial is a diff beast altogether.No lmi available etc

NO hijack assumed..........questioning others opinions is the ONLY way we we grow personally .....!

Never be chicken to do that

ta
rolf

 

[jaycee]

Thanks, good to learn.

Maybe my mum was right when she told me to save $ save $ save $

 

[RightValue]

, it has a 3 year lease with a 3 year option (so pretty much a 6 year lease),

Many thanks

I've got news for you..

It is only a 3 year lease.. the tenant has the option but not the obligation to renew.

The bank will only consider it a 3 year lease.

Good luck but I think your dreams are writing checks your reality can't cash.

cheers

RightValue

 

[Bradsdad]

Hi guys, I have a small problem, ive had bad credit for a while, but in reality it has never bothered me because my family is quite well off, im in a decent job that really helps me pass the time and im quite good at saving.

Not meaning to be nasty but if your family is "quite well off" you should have put you hand up and requested help before things were recorded on your CRAA.

I have no deposit as I decided to pay my defaults and spent a few k on a recent trip to China, I currently earn a shade under 50k from work, is there any chance I can get a loan for this from any lender/broker?

To be blunt.....NO

If so, where do I start?

No more trips to China and start saving frantically. With your credit history I doubt anything over 50-60% would be possible. Even at that range you'd be paying through the nose for it.

 

[Shaneelastic]

Hi guys, I have a small problem, ive had bad credit for a while, but in reality it has never bothered me because my family is quite well off, im in a decent job that really helps me pass the time and im quite good at saving.

If your family is that well off can you could pull off a financing trick internally by way of say setting up the structures right with an accountant?

Also why is this commercial property that great? Will it be better than residential an any way?

 

[Kristine..]

Hi joltz

Welcome to the Forum

Unfortunately, you have another 3 & half years before you are a prime borrowing candidate

However you can use that time very wisely, and once your credit record is clear be in a very strong position to really establish yourself financially

With gross earnings of about $50,000 and assuming no credit cards, personal loans etc, you can borrow around the $350,000 mark

$350,000 would require monthly interest payments of about $1,700.

Can you save that regularly, as if it was a mortgage payment - and this means, paying yourself that money each month, every month, with no excuses for the next 42 months?

If you can, not only will you have a clear credit record but you will also have savings of more than $70,000

What you do with the rest of your income is up to you - go out for dinner, pay rent, go on holidays, doesn't matter - but that $1,700 must be paid to yourself each month with no missed months and no withdrawals.

Better still, open a separate account and have your payroll office salary credit the $1,700 straight to that account.

Judgements, for any amount, are major blocks to getting finance of any kind, let alone a loan for hundreds of thousands of dollars

Don't try and take shortcuts. Accept the limitations and plan to be in the strongest position possible when the judgement and defaults are no longer on your record.

Cheers
Kristine