Help Getting Finance

I currently have a one bedroom house in Spotswood Melbourne worth approx. $600,000 which I owe $440,000.
I would like to rent out this house and would get $400 per week.
We would like to purchase another home for approx. $800,000 but our borrowing capacity according to the bank is $500,000.
We earn $121,000 gross per year and have no children or other debts.
Does anyone know if this sounds right or should we be able to shop around and get the $800,000 we would like to borrow.
Thankyou
 
Which lender? Borrowing capacity varies from one lender to another and the big 4 usually don't have the best serviceability. It also changes from one person to another as everyone's circumstances are different.

The only practical way to get an understanding of your options is to speak with a mortgage broker.
 
It was from the CBA.
Would we be able to increase our borrowing capacity to $800,000 if we cross collateralised our properties?
 
I currently have a one bedroom house in Spotswood Melbourne worth approx. $600,000 which I owe $440,000.
I would like to rent out this house and would get $400 per week.
We would like to purchase another home for approx. $800,000 but our borrowing capacity according to the bank is $500,000.
We earn $121,000 gross per year and have no children or other debts.
Does anyone know if this sounds right or should we be able to shop around and get the $800,000 we would like to borrow.
Thankyou

Crane

I would recommend seeing a mortgage broker as you are not going to get all the answers from a bank.

But lets have a look at the figures.
You earn 121k gross between the 2 of you, you still have to pay tax, which without knowing each of your wages I will assume 30k, this leave 90k. Then your property at 400 per week gives you a income of 110k a year.

If you add 400k + 800k + 45k (stamp duty) - Loans totaling 1245k

Interest only at 7% ( the banks will generally add another 2.5% just in case) for 1.25mil - $7300

Based on above before you add in costs ( insurance/rates/living expenses etc etc) you are taking home per month $9150 and paying the bank $7300 per month

Obviously I have guesstimated some figures but I can see why the bank would have some concern

Jezza
 
It was from the CBA.
Would we be able to increase our borrowing capacity to $800,000 if we cross collateralised our properties?

Cross collateralisation is generally irrelevant to serviceability. It might influence a decision if the deal looks risky, but if you don't service with only 1 or 2 properties in your portfolio it's not going to help.

The CBA usually isn't one of the more generous lenders out there either. If you rank lenders by serviceability, they tend to be in the lower half for most people.

It's also important to make sure that you understand your budget and what you can afford. Some lenders will lend more than people can reasonably afford which isn't good for anyone. On the other hand they don't take into account all of your circumstances either.
 
Hiya Crane

Cross coll wont help much..

As has been said, speak with a broker,.

I suspect there is more to it than just servicing per se.

600k value with 440 owing, refinance to 90 % leaves around 100 k on a good day

On an 800 k buy, your generous state gov will want 45 000 leaving 65 k

that means youd need a 92 % + lmi lend at 700 k plus

not easy with the mortgage insurers

ta
rolf
 
As Rolf mentioned, equity could be an issue here also. Do you have any funds to contribute towards the purchase or are you wishing to just use the quity in your current property?

Also a split of your 2 incomes would assist so as to determine tax rates. You mention no other debts but on many an occassion clients forget to make mention of any credit card facilities. Would there be any of these present?

Regards
Steve
 
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