Help - need a loan

Hi there,

Need help finding a loan for an amazing deal for my daughter, but we are struggling with serviceability.

Scenario:
Dual loan application for Block of land in large regional area in NSW(Postcode 2460): Value $300k and construction of investment home $160k= total value $460k (@ 95% loan= $437k + LMI). Rental income will be $350/week.

Would like a 95% loan but don't want to go back more than 3 months in financials as she went overlimit briefly on her savings and loan accounts.(I could ring her neck for this as I have heard LMI people hate this - is this true?)

Current asset: 1 IP value $330k, Westpac loan for $310k IO 5yrs then 25 yrs P & I commenced 2010. (70k of these funds has been sitting in an offset a/c for 3 months ready for deposit and sub-division costs).
Monthly payments approx $1850. Rent is $400/week

Current Salary: 3 yrs as teacher $2508/fortnight gross. PLUS blasted HECS debt which knocks her serviceability

Other Outgoings: Shares house and pays rent $100 week.
CBA Mastercard with $3000 limit (has only had this 1 month - would you believe she had a Westpac one but went overlimit a few times briefly on that one too so I killed it so she does not have to show the record to a lender? ##%$#@! - what can I say :eek:- she is young, brain the size of a planet but not good with simple money management, though she is learning- slowly).

This is a great deal but banks seem very tough now when calculating serviceability eg. CBA calculate her Westpac loan at P & I over remaining time etc. and NOW they say they won't go over 300k for a 95% lend which is news to me.

Anyway, hoping not to lose this deal as it has taken me ages to find one this good. Lots of potential for sub-division etc. So hoping some of you enterprising s'soft brokers can come up with something. Be sure to include negative gearing permitted in bank calculators for investments. Even then it may be hard to get over the line. A last resort is a 90% loan but then she may run out of cash to do sub-division, so would prefer 95%.
Many thanks
Carol
Email: [email protected]
 
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Seems like a pretty horrible deal without knowing any details unless there is a particular reason you're expecting large capital gains.
 
Carol there are certainly lenders who may do it but at 95% LMI her savings and credit history have to be squeaky clean. Best not to go for LMI if possible through other means.
 
Yes indeedee, sub-division potential has a lot to do with it being amazing. If I told you more I would have to silence you.
Her credit history is squeaky clean, but her savings history is non-existant.
Has bought a new(second hand) car for cash, relocated home and work and then moved house 3 times in last year, so not a lot of cash to spare.
Not all lenders want to see savings for deposit. It is serviceability I see as the problem.
As I said she has 70k from equity redraw that has been sitting in offset waiting to be used on the next deal.
 
Savings is definitely an issue if LMI is involved, serviceability or not. This is esp so since it appears to be construction loan too
 
.
Not all lenders want to see savings for deposit. It is serviceability I see as the problem.

Serviceability to some extent at least would be demonstrated by savings pattern over a few months.

if the shortfall is say 1000 a month, and we have zero demonstrated savings, the deal in isolation is scary.

Its a loan I personally would not put forward to a lender, unless there were some strong mitigants.

ta
rolf
 
does she want to do this, or do you want her to do it?
It sounds to me that she may not be mature enough yet to manage a big project, no matter how good it is.
If its something you are pushing for, I would leave it for the moment.... another opportunity will come along at the right time.
 
Penny K,

She is keen as punch (sorry to disappoint you but I am not a soccer investment mum). She has seen how multiple investment properties has created wealth for her parents, and wants some action herself.
I wish I had the brains at her age - 25yrs. (and parents willing to help me) to start investing. It can be quite scary at any age, especially if you don't know much about it. But this is her second investment now, and she is learning as much as she is able, but she is still not good at numbers, and I doubt she ever will be, but she is smart enough to get good advice and mentoring. Best of all, she has a builder and a plumber for friends..... what more could any investor ask.:)
Cheers
Seaview
 
Anyway, hoping not to lose this deal as it has taken me ages to find one this good. Lots of potential for sub-division etc. So hoping some of you enterprising s'soft brokers can come up with something. Be sure to include negative gearing permitted in bank calculators for investments. Even then it may be hard to get over the line. A last resort is a 90% loan but then she may run out of cash to do sub-division, so would prefer 95%.
Many thanks
Carol
Email: [email protected]
Ph:02 4982 6777



Yes indeedee, sub-division potential has a lot to do with it being amazing. If I told you more I would have to silence you.
Her credit history is squeaky clean, but her savings history is non-existant.
Has bought a new(second hand) car for cash, relocated home and work and then moved house 3 times in last year, so not a lot of cash to spare.
Not all lenders want to see savings for deposit. It is serviceability I see as the problem.
As I said she has 70k from equity redraw that has been sitting in offset waiting to be used on the next deal.

why wouldnt you contact one of the brokers on this forum directly and see if they can giuve you some specific advice as well as possibly help organise the loan?
 
Hi Sanj,

I have emailed directly 1 broker from Somersoft, but wanted to tap into all those other ones that post here too. I do not have time to look up their details from lots of old posts in the Finance section so thought this was a quick to get them to look at this scenario. Will be happy to give more details to curious onlookers when we have firmed up the deal.
Thanks
Seaview
 
but her savings history is non-existant......relocated home and work and then moved house 3 times in last year, so not a lot of cash to spare.

Unfortunately this may not be strong enough...what would concern me is the credit score with the lack of stability of employment and residence + no surplus capacity evidenced + 97% loan.
 
Hi Marty and Rolf,
She has had same job for 3 years, same employer for 10 months. Same residence for 6 months. Cannot we count the $ 70k sitting in redraw account as extra capacity? Credit report is fine.

Would it help if she put 2 dwellings on the land e.g. duplex/villas. total cost of land + construction = $600k.... @ 95% loan = $570k+ LMI. By doing this the rental income is doubled to $700 weekly, and the negative gearing on 2 new properties plus her existing one is actually cash-flow positive. Perhaps this may get it over the line (if you can factor it in to your calculator??) Ideally, we need a lender that has capacity to approve LMI in-house as don't want too close a scrutiny of savings history.
Thanks
Seaview
 
Hi Marty and Rolf,
She has had same job for 3 years, same employer for 10 months. Same residence for 6 months. Cannot we count the $ 70k sitting in redraw account as extra capacity? Credit report is fine.

Would it help if she put 2 dwellings on the land e.g. duplex/villas. total cost of land + construction = $600k.... @ 95% loan = $570k+ LMI. By doing this the rental income is doubled to $700 weekly, and the negative gearing on 2 new properties plus her existing one is actually cash-flow positive. Perhaps this may get it over the line (if you can factor it in to your calculator??) Ideally, we need a lender that has capacity to approve LMI in-house as don't want too close a scrutiny of savings history.
Thanks
Seaview

" Monthly payments approx $1850. Rent is $400/week"

How can her existing property be CF+ if those are the figures? and if you take out the $70k to finance the new deal the will put her even further into negative territory.
 
Kessie,

Total borrowings = 310k + 570k = 880k @ 7% = approx $62k per year in loan payments
Rental income = $400 + $700 = $1100 = approx $57k per year.... so she is $5k short .... but can claim depreciation on 3 new dwellings back each week in her pay = approx $24k deductions @ 30% tax rate = approx $8k extra in her pay packet to help cover the $5k shortfall.
That is what I mean by cashflow positive (after tax).
The problem is not in finding enough money to cover the loans but in passing the banks uber stringent criteria in the current lending climate.:(
Seaview
 
Kessie,

Total borrowings = 310k + 570k = 880k @ 7% = approx $62k per year in loan payments
Rental income = $400 + $700 = $1100 = approx $57k per year.... so she is $5k short .... but can claim depreciation on 3 new dwellings back each week in her pay = approx $24k deductions @ 30% tax rate = approx $8k extra in her pay packet to help cover the $5k shortfall.
That is what I mean by cashflow positive (after tax).
The problem is not in finding enough money to cover the loans but in passing the banks uber stringent criteria in the current lending climate.:(
Seaview

So the $70k that you mention is that a line of credit, and or what do you mean by 'sitting in an offset account'?

Fair enough she gets $24k worth of depreciation etc but what about other property holding costs such as rates, water, insurance, PM fees, vacancy, maintenance, repairs etc. I would assume just the rates would chew up that extra $3k each year.
 
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