Financing without income?

Gockie

Gockie

Hi!
Wondering, I'm asset rich but cash flow poor as I'm currently jobless, (I finished a short 4 month contract in December). I want to buy another ip unit around 400k, (possible rent $440 per week) and want to see if I can get this over the line. The area is very hot and if I don't do something by this weekend I'm sure I will lose the opportunity to buy this particular property.

My Assets:
*I have a house (PPOR) worth $950k, my ownership is 37% (bought with defacto) currently with an outstanding mortgage of $170k (60k in offset), interest is approx $500 per month. Actually we have 60k that is listed as being "in advance"
*A unit worth approx $550k (but may not get a valuation that high should I get a valuation), rented at $440 per week, loan of $265k io
*A townhouse worth approx $380k, rented at $390 per week, loan of $248k, io.

I finished a short 4 month contract in December and since then I've been on a holiday and studied Korean. Now I'm currently jobless and in the job market. Potential salary roughly 100k. (SQL server database developer with 10 years experience). This could be higher if I take a contract.
I've enquired with Bendigo Bank... (Friendly bank staff by the way) They may be able to do something for me.

My partner is not really interested in property investment... But he has a very good income. He won't let me redraw from the PPOR and won't let me include his salary or name on any documents so anyway.... Btw If I could include his salary our borrowing capacity comes out to be well over $1million... And our joint salary would give us the capacity to borrow nearly 2 million according to the Bendigo Bank calculator :eek:

I really want to buy that particular property as I know its potential.... (My other unit is in the same strata.... I know that's a risk to lenders but it is one hell of a good opportunity)
If Bendigo bank cannot help me, does anybody have any solutions as to my financing options?

Thanks
 
It will be very unlikely you will find a lender to lend you money because this would be a breach of NCCP legislation.

However you may find a lender willing to lend to a company which you control. The company would need to come up with at least a 20% deposit though.
 
Realistically ask yourself, if you don't have an income, how can you afford the repayments? Rental income may cover the interest, but what about things like rates & maintenance?

Unfortunately if you can't demonstrate to a lender that you can meet their affordability criteria, you can't get a loan.

I know it's frustrating, but is there any way you can get your partner on board? Outside of this, you probably need to look at more permanent employment.
 
PT_Bear said:
Realistically ask yourself, if you don't have an income, how can you afford the repayments? Rental income may cover the interest, but what about things like rates & maintenance?

Unfortunately if you can't demonstrate to a lender that you can meet their affordability criteria, you can't get a loan.

I know it's frustrating, but is there any way you can get your partner on board? Outside of this, you probably need to look at more permanent employment.
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Is it possible to get a LOC on one of her properties and use that to pay interest? I guess getting the LOC would be hard without the job:(
 
Banks don't do asset lending anymore :(

Once you are gainfully employed look at gearing your properties to 80 or 90% LVR, partner permitting?
 
Aaron_C said:
A LOC is still a loan so you still need to show servicing.
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I've been told the best strategy is while you have a job and the market is hot, get the biggest LOC you can get and sit on it. Keep upping it as the market goes up. Then later on if the market tanks the LOC amount isn't reevaluated by the bank and even if you don't have a job you have that at your disposal to snap up the bargains. If it doesn't tank then you've still got it there and it doesn't cost you a cent if it goes unused. Would you agree with that? Or are there alternative strategies one could use? In this scenario the OP would have been able to get a decent LOC while she was working and just left it unused. If she had done that she'd have money ready to go, job or no job.
 
jerrybee said:
I've been told the best strategy is while you have a job and the market is hot, get the biggest LOC you can get and sit on it.
Click to expand...

Always best to get as much as you can while you can.

As the economy cycles debt will not be as readily available, that is for sure.

If you tick the right boxes lenders are currently rolling out the proverbial red carpet.

SVR can mimic LOCs and don't have a recall clause as part of the T&Cs.

In saying that LOCs do have their place.
 
FMS said:
Always best to get as much as you can while you can.

As the economy cycles debt will not be as readily available, that is for sure.

If you tick the right boxes lenders are currently rolling out the proverbial red carpet.
Click to expand...

Is it true they don't reevaluate even if the value has gone down and you don't have a job? Cause the strategy sounds too good to be true otherwise:) cause I could get an LOC based on how much equity I have now and withstand a huge interest rate rise and no job for quite a while.
 
jerrybee said:
Is it true they don't reevaluate even if the value has gone down and you don't have a job? Cause the strategy sounds too good to be true otherwise:) cause I could get an LOC based on how much equity I have now and withstand a huge interest rate rise and no job for quite a while.
Click to expand...

Banks can impose a lot of things if they chose to but if you make your contractual payments on time they generally leave you alone.

If you get a LOC it is best practice to pay the monthly interest from an outside account as capitalizing interest can be frowned upon by the ATO if it is deemed a tax scheme.

Brokers/bankers do have to disclose if they are aware that your future situation will change so if you tell them you are going to loose/quit your job after the loan is approved, well um....
 
jerrybee said:
What's an SVR and what are the pros and cons vs a LOC?
Click to expand...

SVR = Standard Variable Rate aka Term Loan

SVR usually have a lower interest rate typically .15% and are repaid over an agreed term Eg. 5 years interest only then 25 years P&I over a 30 year term.

LOC are generally revolving meaning they don't have a fixed term in which they need to be repaid and work like a big credit card.

The main cons with LOCs from my current understanding is the ability for the bank to recall a LOC at their discretion and a slightly higher interest rate. They also have the ability to have the interest capitilsed but you need to be careful how this is applied to avoid scheming :p

The Pros are that they are easier to manage in regards to contamination by mixing of personal debt and investment debt which the people in banks generally don't understand (nor care to) from my experience.

There are other pros and cons that others can embellish on as I need to go and watch my daily pre-recorded dose of Grand Designs.
 
Thanks everybody for your input and the info on LOC. This is one heck of a good opportunity so I'd really like to get my partner into it as it's the easiest course of attack. He has seen how well I've done on my past properties so I hope he will change his attitude! Anyway if I can get a job ASAP that would be awesome... The bank reckons if I can get a signed contract for work (preferably full time still in the same kind of work) I would be fine...
I believe this property should sell at the first open so I don't have much time...

If this doesn't come off in time then the next place I'm looking is Brisbane. But I know I can make 100k straightaway on this one.
 
I could strangle my partner.... All he wants to do is pay off this homeloan and then not buy any more properties. Arrrgggghhhh..... Oh well. See what the bank says....
 
Gockie said:
I could strangle my partner.... All he wants to do is pay off this homeloan and then not buy any more properties. Arrrgggghhhh..... Oh well. See what the bank says....
Click to expand...

This is the worst. When you throw so much black and white information at someone and they still refuse to see it.
 
Well, I spoke with the agent and apparently around 100 or more parties viewed it during the open and he has at least 21 offers before 9am this morning.... I told him about my Reno plan and he said it was a good idea... He also thought there was a lot of wasted space... Couldn't convince the defacto so I can't get it.... :( there goes 60k or more down the gurgler.... Unless anybody from the forum can help me out ASAP the opportunity is slipping away...
 
ha, 100 people viewing it and 21 offers? Must be the most desirable property in the whole state! I'd grab some pop corn, sit back and watch everyone brawl it out for this amazing, once in a lifetime property.
 
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