From: Les .
G'day all,
I've heard others mention this, but today got hit with it myself.
Question:
When applying for another loan, is your current rental income treated as Income, or offset against mortgages. I can tell you now it can make a HUGE difference to your loan application.
Why? Well, simply put, if it's treated as Income, then the amount that is offset against your outgoings (mortgages) will be equal to the DSR level that your lender will let you have - usually 30% to 40%. So you'd better have HUGE positive gearing if you want to get a loan, or HUGE equity to make the difference.
I know that some lenders will allow (say) 75% of Rental Income to be offset directly against mortgage payments - a helluva lot better than 30 - 40% !!!!! I'm about to go search the archives to find the post that can tell me which lender I should be going to.
In my case, with rent as income, the DSR shows as 40% - but if rent is offset (at 75%) the DSR plunges to 25% - the latter wins, the former does not !!
If I find the archived post (with lender's name) I'll post the details. But the question is, how is YOUR lender calculating YOUR situation? Are they holding you back unnecessarily??
And if it's not too much of a problem for you now, how will it be when you own 20 IP's, and only 30% of rent is allowed to offset the mortgages? Would THAT stunt your growth??
The way some lenders think, we must start eating more with each IP we purchase !! (hate to think how I'll look when I own 10 !!)
Food for thought ... ;^)
Regards
Les
G'day all,
I've heard others mention this, but today got hit with it myself.
Question:
When applying for another loan, is your current rental income treated as Income, or offset against mortgages. I can tell you now it can make a HUGE difference to your loan application.
Why? Well, simply put, if it's treated as Income, then the amount that is offset against your outgoings (mortgages) will be equal to the DSR level that your lender will let you have - usually 30% to 40%. So you'd better have HUGE positive gearing if you want to get a loan, or HUGE equity to make the difference.
I know that some lenders will allow (say) 75% of Rental Income to be offset directly against mortgage payments - a helluva lot better than 30 - 40% !!!!! I'm about to go search the archives to find the post that can tell me which lender I should be going to.
In my case, with rent as income, the DSR shows as 40% - but if rent is offset (at 75%) the DSR plunges to 25% - the latter wins, the former does not !!
If I find the archived post (with lender's name) I'll post the details. But the question is, how is YOUR lender calculating YOUR situation? Are they holding you back unnecessarily??
And if it's not too much of a problem for you now, how will it be when you own 20 IP's, and only 30% of rent is allowed to offset the mortgages? Would THAT stunt your growth??
The way some lenders think, we must start eating more with each IP we purchase !! (hate to think how I'll look when I own 10 !!)
Food for thought ... ;^)
Regards
Les
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