Crazy bank servicability calculations

[WillG]

How would you expect a bank to calculate servicabilty for "person A" where Person A owns half an IP with Person B?

A certain bank beginning wth the letter 'W' endng in 'C' does t like this.

The bank takes into consideration 75% of 50% of the rental income.

The bank counts 100% of the loan of the existing IP loan as a liability for "person A". This effectively means the bank is counting 37.5% of the income for the existing IP against the full loan for "person A".

This severly impedes future borrowing for "person A" and "person B"

How do other banks calculate servicability aganst jointly owned properties?

 

[jonmardell]

you will find most lenders will take into consideration the full debt and half the rent income because at the end of the day you are both responsible for the full debt. Look for another lender cause each bank calculates servicing differently.

 

[Marty McDonald]

Amp is your only option as they will take actual repayments and actual share of rental. What's even better they will take your word for it on share of the debt!

 

[boods99]

They have a Joint and Severally Liable clause in their contract. Just about every lender will have similar under the same circumstances.
Moral of the story: don't buy property with someone else if you can help it...

Different story with CIP though...

Boods


*Edit: just saw Marty's post...s'pose there are exceptions to every rule! Would like to see their documentation though...there's bound to be a sting somewhere!

 

[Peter_Tersteeg]

Personally I've never had any significant trouble getting 100% of the debt and 100% of the rental income recognised in this situation. The quoted policy of 100% debit and 50% income is general policy though.

 

[WillG]

Personally I've never had any significant trouble getting 100% of the debt and 100% of the rental income recognised in this situation. The quoted policy of 100% debit and 50% income is general policy though.

How do you get 100% rental income recognised? Are you talking about the big banks?

 

[Rolf Latham]

quite a few lenders can make it workwith some fiddling, St George for one will let you use their common debt reducer policy, and a couple of lenders will allow full tax dedn for the entire debt as an "addback"

ta
rolf