I want more serviceability

[skyrocks]

Hi all
my wife and I have been buying property since November 2012. we approached the bank to buy another property and the bank was telling me my loan application had to be assessed because my serviceability was to low. also that the gov has mad rules concerning how much I can borrow in terms of a percentage meaning the more I earn the more that needs to be set aside for living expenses.

our income is around 2000 or more per week including rental and our expenses are between 1000 and 1100 per week leaving about 1000 per week just going to the offset account
we have
lutana 166k loan ppr
lindisfarne 139k loan 310 rent+
new norfolk 174k loan 0 rent
zeehan 50k loan 0 rent
valued @ 675K

We have been approved for the new purchase but when we want to buy the next how do I increase my serviceability?

How Do I continue to buy more? I want Ten IP's

James

 

[Jamie M]

How Do I continue to buy more? I want Ten IP's

James

Diversify your lenders - you're restricting yourself to the advice and serviceability calculator of your current lender.

Cheers

Jamie

 

[The Y-man]

new norfolk 174k loan 0 rent
zeehan 50k loan 0 rent

Get Rent.....

The Y-man

 

[Rolf Latham]

Get rent is an obvious one, though Im guessing one is land and the other is PPOR


depending on what lender you are with, and how you are structured its possible that you can borrow significantly more.

We have had quite a few cases of 1.5 to 1.8 x more by using some simple strategies that Jamie has alluded to.

The most important q though is this............ can you personally afford ir, its all good and well that a funder provides the money, but if it kills you financially thats not the aim.

Your 1000 excess pw suggests you can.

ta
rolf

 

[skyrocks]

All properties are houses, the two that are not getting rent is because they are undergoing reno, my aim is have all IP positive.

Jamie can you tell me more about diversity. Is it possible for a bank to use the equity in a Property with another Bank?

Thanks all
James

 

[Peter_Tersteeg]

It is possible to structure your lending to use equity across multiple banks. It does need to be managed properly however and the specific solution will depend on your actual serviceability and your existing loans.

It's also possible to use 'proposed rent' to increase serviceability. If the houses are totally gutted you probably should get them closer to a finished state before proceeding. If they're almost ready but it'll be a few weeks before they're tenanted, you can get a rental appraisal and many lenders will include this in your affordability scenarios.

 

[Jamie M]

Hi Sky

Take this basic example that I worked on today.

New client comes to me because his bank won't allow him to access equity and purchase an investment property- simply because it doesn't all service with that one bank.

He could afford it - but his lender has a lousy method of working out max borrowing capacity and won't release funds if the IP purchase doesn't service on their calculator.

By refinancing his existing loan with a new lender, we were able to access equity with that lender and carry out the IP purchase with a third lender.

He also got a $1k cash rebate for the refi and a lower rate as well.

So long story short - if he had of just accepted the "no" he received from his current bank - he wouldn't have been able to purchase his IP. A little thinking outside the square and careful lender selection made the IP purchase possible.


Cheers

Jamie

 

[Rolf Latham]

So long story short - if he had of just accepted the "no" he received from his current bank - he wouldn't have been able to purchase his IP. A little thinking outside the square and careful lender selection made the IP purchase possible.

more to the point, if one believes in cap gain as a reason for investing, whats the Nett Present Value loss of accepting that NO from the bank worth 20 years down the track.

Scary stuff

ta
rolf

 

[DaveM]

So long story short - if he had of just accepted the "no" he received from his current bank - he wouldn't have been able to purchase his IP. A little thinking outside the square and careful lender selection made the IP purchase possible.

Same for me... the direct lender I had been with said NO MONEY FOR PPOR OR IP FOR YOU COME BACK 1 YEAR.

Got a broker from the forums involved instead and more IP's and PPOR as the money flowed.

If your lender says no, move onto the next.

 

[skyrocks]

Good broker?
In tassy?
Who?

 

[Blueberry]

Any reason it has to be in TAS? My mortgage broker is interstate

 

[impala67]

Any reason it has to be in TAS? My mortgage broker is interstate

+1

You don't need a local.

 

[Jamie M]

Good broker?
In tassy?
Who?

You guys have phone and internet right?

I'm just being cheeky. However, working with an interstate broker is easy. Everything is done via email and phone - so you have the entire country to choose a broker from.

Cheers

Jamie

 

[Richard Feynman]

+1

You don't need a local.

+2

Don't limit your options based on geographic considerations.

 

[Waldo]

+1

You don't need a local.

I chose a local broker, still yet to meet the bloke though (working through a 3rd deal with him currently).

 

[skyrocks]

You guys have phone and internet right?

I'm just being cheeky. However, working with an interstate broker is easy. Everything is done via email and phone - so you have the entire country to choose a broker from.

Cheers

Jamie

We got the telephone. Still waiting on the internet, they said next year. Oh well there's always the facsimile

 

[impala67]

I chose a local broker, still yet to meet the bloke though (working through a 3rd deal with him currently).

I met my financial planner after 3 and a bit years.

His first words were ...Finally ! He only works 9 kms away.

 

[A Jeremy]

This won't be the answer to your problems but if you want to talk about increasing your serviceability in every way possible, charging an extra $10-20 rent a week for garden maintenance, or more in a situation where you supply utilities - maybe a sharehouse arrangement - your rents will appear higher to your lender even though you may not be profiting more.

You will profit if you are looking to invest in headaches though. No one said it was supposed to be easy.

 

[Richard Feynman]

Jeremy, the idea of supplying utilities in exchange for for an increased weekly rent is great.

You'd be able to take advantage of credit card award points too.

 

[skyrocks]

This won't be the answer to your problems but if you want to talk about increasing your serviceability in every way possible, charging an extra $10-20 rent a week for garden maintenance, or more in a situation where you supply utilities - maybe a sharehouse arrangement - your rents will appear higher to your lender even though you may not be profiting more.

You will profit if you are looking to invest in headaches though. No one said it was supposed to be easy.

Like paying for the internet connection? Or pay TV? And getting it back in the rent .

Will have to wait a year though for the internet to get here,,, we're a bit behind the times in tassy