Finance question RE: PPOR to IP

HI all, due to number of setbacks have had to put investment plans on hold however am now hoping to go again, would really appreciate any advice on loan options available, realise this may overlap with some other similar threads but have few extra details thank you!

Quick numbers as below:

My Total income: $60,000- 65,000 (Wife currently making another $40k plus and rising which I understand we can't count until bankruptcy finished, however it definitely helps keep my serviceability up)
Have a $3500 credit card which is maxed from reno, funeral etc but being paid down soon, no other loans or debts. I’m 33yr old, wife 32, with 2yr old dependent child- no plans for any more. All bills are paid ahead of time/up to date, we have no flexi-rents, interest free terms, appliance leases etc.

Also have $25k cash. Should I put in redraw for time being?

Current PPOR:
Purchase price 2011: $260k
CBA Home loan on 3bd, 2 bath, 1 garage brick and tile: $197, 111
Current Repayments: $700/paid fortnightly (I+P). ($350/wk)
Interest: currently 5.45% p.a
Has had both bathroom and ensuite full reno, brand new kitchen, new paint, flooring whole house, roof resto etc.
Revalue Home: $290,000 (hopefully!)- comparable sales in area sit between $260-$300k, house is above average in position, size and features.

What we want to do is make current PPOR an IP, rent it (would be close to CF neutral on IO up to about 6%, rent would be about $230-250/wk, leave minimum equity in it and use equity plus $25k cash to fund new PPOR, move in with folks for free while it is built, will require $430k for our goal of building a prefab modular home on a vacant block. Have spoken to town planner, council etc, is all very doable at this price. Long term we want as much equity as possible as fast as possible to eventually partner with dad to do a townhouse build on his massive block in Kiama, I am now 1/4 owner with mum having passed away earlier this year, building looks like the quickest way to get the equity up.

If anyone is still with me after that essay, firstly- thank you! What we would like to know is our approximate borrowing power, whether anyone has had to make same decision- I see other prospective PPOR to IP threads in here, however how has it worked out for people who have done it? Are we having ourselves on and should we just shelf investing until wife out of bankruptcy- but could be few years of missing time in market? Or is using the serviceability I have now to get started sooner the best bet, even if we can only access smaller funds and have to start with a unit reno or something instead- although I just don’t see the required fast CG to make it work with our longer plan? A massive thank you in advance to anyone willing to share, all knowledge greatly appreciated!
 
1. When did you wife become bankrupt?
2. When will she be discharged?
3. Is the current property in both names or single name?
4. Can the new purchase be only in your name?
5. Order an upfront valuation to determine the exact equity against the current property which will go a far way in planning for the new purchase.
 
Thanks Shahin,

1. When did you wife become bankrupt?
September 2010
2. When will she be discharged?
This September
3. Is the current property in both names or single name?
Everything is in my name only.
4. Can the new purchase be only in your name?
That's what we would like to do, then bring her on board after out she is of bankruptcy by a year or so and boost income/serviceability and go again on another purchase or at least smash down the loan. Main question now is working out my serviceability? Had a broker look over situation a while back, he was a good guy but only really keen on basic loan set ups, once wifes bankruptcy mentioned he pretty much barred it until she was a year discharged with decent credit.
5. Order an upfront valuation to determine the exact equity against the current property which will go a far way in planning for the new purchase.
Broker mentioned previously said same thing, however as I am currently just trying to get a rough indication before I get my hopes up, would it help if I added my neighbour/friend (also with CBA) just got theirs valued for loan increase, their place is smaller, only one bathroom, fibro clad, smaller block, no views, rough quality reno, no garage and came in at $270k, would that be enough info to give us an estimate?

Thanks again,

Stu.
 
Before you do anything you should seek legal advice because of the bankruptcy issues.

Hi Terry- I only have a basic understanding of bankruptcy (declare, do your time in sin bin, earn under certain amount during this time or you have to start paying creditors back, no financial contracts, credit etc), a year or so after discharge with good credit you can start to access credit etc again?

Briefly, what should I look out for/study up on? I had planned on keeping wife's name of any loans etc, and not counting her income as part of applications, any tips appreciated ta.
 
You cannot include your wife on the loan applications which is why I asked particularly since your LVR is above 80%. You can go to a specialised lender but a) they will charge you like a wounded bull and b) you can get the loan across the line with 2 mainstream lenders.
 
You cannot include your wife on the loan applications which is why I asked particularly since your LVR is above 80%. You can go to a specialised lender but a) they will charge you like a wounded bull and b) you can get the loan across the line with 2 mainstream lenders.

Yep, understood, had 20% down on previous buys and avoided LMI etc, however with less to work with this time round, bigger plans and leaving the wife's income off I wasn't sure what was available, thanks again for checking it out for me, cheers.
 
Hi Terry- I only have a basic understanding of bankruptcy (declare, do your time in sin bin, earn under certain amount during this time or you have to start paying creditors back, no financial contracts, credit etc), a year or so after discharge with good credit you can start to access credit etc again?

Briefly, what should I look out for/study up on? I had planned on keeping wife's name of any loans etc, and not counting her income as part of applications, any tips appreciated ta.

You should consider a few things including resulting trusts and constructive trusts.

Unlikely becuase of the short time left before discharge but any property you buy could be considered partially hers too especially if you use money that was earned by her and or she contributes to the loan. This could result in seizure by her trustee or caveats etc
 
Forget about using your wife's income. Bankrupts, especially undischarged ones, are hard to finance at any meaningful interest rate unless the LVR is below 80%. Even then they treat you like a criminal.

As stated, consult a broker who knows what they're doing to get a valuation done to ensure the LVR is below 80%. Then start the process of rebuilding. Position yourself so when your wife is discharged (and when the bankruptcy drops off her file) that you can then start going straight away. This requires many years of advance planning.
 
Thanks Terry, good food for thought I had not considered that, very handy to know, hopefully we plan/save/hustle like mad while she still in bankruptcy and then bring her income on board too once we in the clear.

Matto, yeah, maths on that one was pretty crook ha ha might need to revisit those numbers hey!

Aaron- understood, has been a really good life lesson for my wife and I, bankruptcy is no joke and something she/I never want to have to worry about again.

Thank you all for the input, cheers.
 
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