Factors in ascertaining budget for new purchase

Ready to buy my next IP (future PPOR), have crunched all the numbers and I am comfortable with a purchase price of $x (and all associated costs e.g. stamp duty, mortgage duty, conveyancing etc etc)

20% deposit is ready to go, but getting a bank to give me an 80% loan is obviously also a requirement and where my knowledge stops. I know it takes into account my income and the risk exposure with my current properties, but is it as simple as:
- "the bank will lend me $y"
or more complicated like:
- "given that exact property you want to buy, we've valued it at $v and we will lend you p% of $v"
?

The ROI is not as appealling if I have to pay >20% deposit so an 80% loan is the goal here, but apart from picking a bank semi-randomly and asking for conditional pre-approval (that's probably not worth the paper it's printed on), is there any way I can find out my budget first and not waste my time looking at properties worth up to $x?
 
ROI should be calculated on full costs IMO so not 80% LVR but 100% + costs. As you need to account for the costs of funds, your deposit came from somewhere and could be earning you money.

Just because you speak with a bank doesn't mean they're giving you pre-approval. It's not quiet as simple as that, but not far off. Once your income + expenses are assess should be able to tell you what you can afford. If you speak with a broker they will be able to tell you what you can afford with each different bank on their panel.
 
ROI should be calculated on full costs IMO so not 80% LVR but 100% + costs. As you need to account for the costs of funds, your deposit came from somewhere and could be earning you money.

Just because you speak with a bank doesn't mean they're giving you pre-approval. It's not quiet as simple as that, but not far off. Once your income + expenses are assess should be able to tell you what you can afford. If you speak with a broker they will be able to tell you what you can afford with each different bank on their panel.

Thanks Brady, yes ROI incorporates all costs as well as changes in cashflow as a result of deposit monies no longer sitting in my ppor offset.

Have been asking my current broker since last November but must be asking the wrong questions as I have not gotten anywhere, hence my posting here.
 
Time to change broker/banker, takes minutes not months to work out what someone can borrow once you have all the info.
 
If you approach each bank individually you'll fry your credit file before you've even put in an application, so go through a broker.

You'll need to have all your info handy - income and expenditure etc (the more you provide the more accurate we can be) but it's not a complicated thing to do.

The property itself does come into it too, and a broker can order a valuation upfront so there's no nasty surprises.
 
If you approach each bank individually you'll fry your credit file before you've even put in an application, so go through a broker.

You'll need to have all your info handy - income and expenditure etc (the more you provide the more accurate we can be) but it's not a complicated thing to do.

The property itself does come into it too, and a broker can order a valuation upfront so there's no nasty surprises.

Thanks Jess, I was aware of that although one of my friends wasn't and got stung come unconditional approval time!

Broker got back to me with the answer I needed, so back to househunting we go! Thanks everyone.
 
If you approach each bank individually you'll fry your credit file before you've even put in an application, so go through a broker.

You'll need to have all your info handy - income and expenditure etc (the more you provide the more accurate we can be) but it's not a complicated thing to do.

The property itself does come into it too, and a broker can order a valuation upfront so there's no nasty surprises.

Jess maybe stick to talking facts. If no application is input there is no credit hit. Bankers can do servicing calculations without having to input applications.
 
Jess maybe stick to talking facts. If no application is input there is no credit hit. Bankers can do servicing calculations without having to input applications.

Of course they can, it's just that sometimes they don't and it doesn't get discovered until it's too late. I had a client recently who had 2 credit hits from one lender from doing what they thought was 'enquiring' but the banker thought was 'applying'.

Also, if the OP wants to get a proper pre-approval (not just a servicing 'ok') it will definitely mark the credit file. If they get pre-approval from multiple lenders they can add up.
 
Of course they can, it's just that sometimes they don't and it doesn't get discovered until it's too late. I had a client recently who had 2 credit hits from one lender from doing what they thought was 'enquiring' but the banker thought was 'applying'.

Also, if the OP wants to get a proper pre-approval (not just a servicing 'ok') it will definitely mark the credit file. If they get pre-approval from multiple lenders they can add up.

Just like sometimes brokers do the wrong thing. Could tell stories of brokers doing the wrong thing to.

As for second comment, what's your point? By suggesting multiple pre-approvals that wouldn't make sense. Stick to facts not generalised comments.
 
As for second comment, what's your point? By suggesting multiple pre-approvals that wouldn't make sense. Stick to facts not generalised comments.

I'm not suggesting multiple pre-approvals. People go bank shopping all the time without realising how it can affect things - that is all I'm saying.

I think the OP gets that, so we probably don't need to keep going here. Feel free to PM me if you need further clarification.
 
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