Finance wall

S

strongy1986

We haven't hit it yet but I'm pretty sure we will after the next purchase

Can some of the finance gurus on here give us a rule of thumb - comparing incomes (+rental income) to loans outstanding and what further funds can be borrowed

Confusing I know but hopefully you understand what I'm asking

Reason is we don't want to buy a standard 5% yield with good cg prospects if its going to stop us from borrowing for a few years or until our incomes increase

Thanks
 
Well if you want each property you buy to increase your servicing (or at least make it neutral) with the same lender then you need to buy something with a yield of 12% or so.
 
Try and get your hands on a few serviceability calculators from different lenders so you can play with the numbers yourself for an idea. You may be surprised with some of the results. I was.

After my Q4 2013 IP purchase ($460k, 20% deposit, 5% yield), I thought I'd be waiting at least 18 months for my next. Turns out, with a 10% deposit and a 5.5% yield, I'll likely be in a position to borrow close to the same, again, very early next year.
 
Look hate to say online serviceability calculators don't mean a great deal and certainly are not always correct.

Just because you service on a calculator doesn't mean the loan will be approved.

You need to mix and match your lenders when you think you are getting tight.

Suggest you go with a standard run of the mill lender when you are building your portfolio and then use a lender with higher serviceability formula when things get tighter.
 
Best to start with the lender whose calculators are less generous and saving the more generous ones for last. They vary widely depending on your particular situation and also need to take into consideration your future plans and strategy as well.
 
Hi Ben,

We have seen many investors that reached their maximum borrowing capacity too early, before they could reach their target property portfolio. We usually review clients structure to make sure it is optimal (paying off bad debt first, making the best of their funds), then recommend to diversify their loans across various lenders. If you are serious about building a portfolio, you have to be quite strategic about which lender you use; therefore you have to find a good investment property specialised finance broker, who can help you with that. One thing we do for our clients is we suggest to use the tough lenders first, then after having few of those, move on to using those that are more lenient because of various lending criteria. This way, you are maximising your borrowing capacity(legally). You can also look at buying a property under a self-managed super fund if that suits your needs.
 
Last edited by a moderator:
Aaron_C said:
Well if you want each property you buy to increase your servicing (or at least make it neutral) with the same lender then you need to buy something with a yield of 12% or so.
Click to expand...
LOL!

"We're off to see the Wizard...the wonderful Wizard of Oz".

I assume you were having a joke? :D
 
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