IP is now cashflow positive :)
- Thread starter K_Raheja
- Start date
It doesn't quite work that way. Your servicing it dependent on a lot of things.
Regards
Shahin
Regards
Shahin
It will certainly help your financial position to be positive, but positive for you does not equal positive for the bank.
For most banks, when they calculate affordability, they assume the interest rate is P&I at a rate 1.5% higher than their own interest rate. They have all sorts of other policies which may not be realistic in the real world as well.
For most banks, when they calculate affordability, they assume the interest rate is P&I at a rate 1.5% higher than their own interest rate. They have all sorts of other policies which may not be realistic in the real world as well.
Most lenders will also take the rental income at around 75% - 80%
Taking 100% of rental income is possible if the deal fits within certain parameters.
Like PT said though - all lenders also use an assessment rate which can be up to 2% higher than the current rate to work out servicing. Some will also apply this assessment rate to other debts held with other financial institutions.
Having said all that, CF+ properties certainly won't hurt your serviceability.
Cheers
Jamie
Taking 100% of rental income is possible if the deal fits within certain parameters.
Like PT said though - all lenders also use an assessment rate which can be up to 2% higher than the current rate to work out servicing. Some will also apply this assessment rate to other debts held with other financial institutions.
Having said all that, CF+ properties certainly won't hurt your serviceability.
Cheers
Jamie
The best way to find out is to speak with a broker - either your own or one of the several experienced ones from here, who can crunch some numbers for you. Send them a PM
If you used a lender like AMP at 80% LVR or below for your next purchase, they would accept 100% of the rental income from your existing Investment property and 100% of the rental income from the proposed new property. They would also accept "actual" repayments - i.e no loading , on your existing repayments from your 1st IP. In most cases they are at the top, or very near the top, for borrowing capacity in these sorts of situations
There are a few other lenders such as Homeside, who also have very good servicing calcs for investors, which a broker from here would also be able to assist you with.
The other option is NRAS. Again, you'd need it to be at 80% or below, where either Adelaide bank or Firstmac will accept 80% of the NRAS incentive of $9981 as tax free income for servicing. They also accept "actual" repayments on all existing debt, and allow for gearing addbacks. As a general rule, this combination outservices all other lenders by quite a big margin.
if you need to do the deal at greater than 80% LVR, it's likely that neither AMP, Adelaide or Firstmac will be as strong as they are at 80% or below. Homeside will still be very strong to higher LVR's though.
There are quite probably one or two other very strong lender calcs, but Im not sure any of them would quite compete with the options above. Perhaps one of the experienced broker contributors here may be able to offer some alternatives though...
