How much will a 50k increase in income allow me to borrow (roughly)?

After my last purchase in December, I hit my max borrowing limit, but this year my income is expected to jumped by around 50k (I had a tonne of business expenses to deduct last year, which I don't have now). So my income hasn't really increased, just my deductions will have decreased substantially.

Anyhow, roughly how much will this allow me to borrow now? Any chance of getting around 500k?
 
The very general rule is to multiply by 5.

Sounds like you're self employed?

You'll need to be careful with the lenders you use. Some will add back once off expenses, some will average out your earnings over two years - some will take a max 20% increase over the previous FY. Some will go off most recent years only (ANZ, CBA and STG)

All in all - there's no specific answer without assessing your financials.

Cheers

Jamie
 
After my last purchase in December, I hit my max borrowing limit, but this year my income is expected to jumped by around 50k (I had a tonne of business expenses to deduct last year, which I don't have now). So my income hasn't really increased, just my deductions will have decreased substantially.

Anyhow, roughly how much will this allow me to borrow now? Any chance of getting around 500k?

Very rough guide here mate: http://somersoft.com/forums/showthread.php?p=1255261#post1255261

If you're self employed, choose a lender that takes one years financials (CBA/ANZ) - otherwise you'll run into some banks that limit the income they'll use.

If you add $50k to your income and the banks can use it AND your purchasing an investment property that will yield you a rental return - then its HIGHLY LIKELY that you can borrow an additional 500k comfortably.

Cheers,
Redom
 
Actually it went up by 50k last year, and this will be my second year of an additional 50k. I just didn't mention it as I didn't want to complicate my original post. But I'm aware that most banks will need at least 2 years worth, so that's what I'm aiming for.

So yeah I'm waiting anxiously for the next financial year so I can do my tax return asap and get back into the market!!!

(and yes it will be an investment with rental income)


BTW I've been self employed for 8 years now, and all my other loans and calculations were done on this basis, so I think when I say I've already reached my limit, all of this has already been taken into consideration by the banks. I haven't made the switch recently.
 
Actually it went up by 50k last year, and this will be my second year of an additional 50k. I just didn't mention it as I didn't want to complicate my original post. But I'm aware that most banks will need at least 2 years worth, so that's what I'm aiming for.

So yeah I'm waiting anxiously for the next financial year so I can do my tax return asap and get back into the market!!!

(and yes it will be an investment with rental income)


BTW I've been self employed for 8 years now, and all my other loans and calculations were done on this basis, so I think when I say I've already reached my limit, all of this has already been taken into consideration by the banks. I haven't made the switch recently.

Hmm when you say you've reached your servicing wall - is that with ANY bank or just the bank you usually go to?
 
Hmm when you say you've reached your servicing wall - is that with ANY bank or just the bank you usually go to?

All of the ones I'm able to borrow from.

The approach my mortgage broker takes is he says always try to get loans from the most difficult banks when you're starting out. As you acquire more and your circumstances become more complex, you want to leave the best / easiest sources of finance till last. Complex situation + PITA bank = disaster. So that's what I've done. I've slowly worked my way from the hardest down to the easiest. Now I'm maxed out.

Also bear in mind that 80% of my portfolio is in partnership with my brother, so that immediately limits my choices. Apparently some banks count all of the debt but only half the rent:(
 
All of the ones I'm able to borrow from.

The approach my mortgage broker takes is he says always try to get loans from the most difficult banks when you're starting out. As you acquire more and your circumstances become more complex, you want to leave the best / easiest sources of finance till last. Complex situation + PITA bank = disaster. So that's what I've done. I've slowly worked my way from the hardest down to the easiest. Now I'm maxed out.

Also bear in mind that 80% of my portfolio is in partnership with my brother, so that immediately limits my choices. Apparently some banks count all of the debt but only half the rent:(

It sounds like you no longer trust your broker? Do you need a new one? These guys are super polite but it looks to me like you are fishing for more info from them when you should be using them if they have the chops to solve your problem.
 
Back
Top