loan capacity

[tj22]

my income is 28.6k p.a

what is the best loan capacity i could get with a 20% deposit and my dad going guarantor? he's a high income earner. and what interest rate would i roughly be on.

I have no debt
good credit history
full time employment (wages)
would be for PPOR
20% deposit in my bank account to show i saved the money.

thoughts brokers?

 

[Peter_Tersteeg]

There's more to it than simple income and what debts you have. The quick calculator I've got suggests you might be able to borrow about $150k, but frankly this makes a lot of assumptions and is highly unlikely to be accurate. It could be more, it could be less.

Your Dad being willing to help may assist with the deposit, but it's not going to increase your affordability unless he's willing to be a co-owner of the property.

You need to discuss this in detail with a broker. Positing a couple of basic figures on the forum isn't going to get a reliable answer.

 

[Terry_w]

Income of dad won't assist if he is not an owner. You could bring him in as a part owner to do this, but there are various legal consequences.

 

[tj22]

Thanks guys for your in put. I was hoping for 250-270k just so i could get into the market. I would have thought a 20% deposit and a guarantor would of made it possible. all good will have to buy differently.

 

[Peter_Tersteeg]

In simple terms, here's how the figures work if you're earning $28,600 pa...

After tax this is $26,052 pa.

Cost of living for a single is at best $1091 per month, or $13,092 (based on various poverty line indexes). This leaves $12,960 to service the loan.

Lenders assume P&I repayments over 30 years at about 1.5% higher than the actual rate, so 7.5%.

$154,000 @ 7.5% P&I over 30 years = $1,077 / month or $12,924 per year repayments.

This budget leaves $36 per year for entertainment and lifestyle.

Having a 20% deposit or a guarantor doesn't put extra cash in your pocket to make repayments.

If you think you can live on less that $1091 per month, you're probably living at home with parents paying a lot of the bills such as council & water rates, electricity, gas, maintenance, car insurance, fuel, food, etc. These figures make no allowance at all for things like superannuation, job loss, medical expenses.

 

[Nemo30]

Out of curiosity, what would the figures look like (roughly) if it was an IP?

Could the OP possibly purchase the same property as an IP..then say in 12 months time move in himself and possibly rent out the other other bedrooms?

 

[Peter_Tersteeg]

Out of curiosity, what would the figures look like (roughly) if it was an IP?

Could the OP possibly purchase the same property as an IP..then say in 12 months time move in himself and possibly rent out the other other bedrooms?

Would likely be worse, not better.

The borrower will receive rent as extra income, but lenders will only allow 80% of that to cover other holding costs of the IP. You've also then got to ask where will the borrower live? What will it cost them to rent?

Even if the borrower lives with family and has rental expenses, most lenders will assume a minimum figure of $150 per week. They're looking at the worse case scenario where the borrowers parents die and the borrower no longer has a roof over their head.

 

[tj22]

In simple terms, here's how the figures work if you're earning $28,600 pa...

After tax this is $26,052 pa.

Cost of living for a single is at best $1091 per month, or $13,092 (based on various poverty line indexes). This leaves $12,960 to service the loan.

Lenders assume P&I repayments over 30 years at about 1.5% higher than the actual rate, so 7.5%.

$154,000 @ 7.5% P&I over 30 years = $1,077 / month or $12,924 per year repayments.

This budget leaves $36 per year for entertainment and lifestyle.

Having a 20% deposit or a guarantor doesn't put extra cash in your pocket to make repayments.

If you think you can live on less that $1091 per month, you're probably living at home with parents paying a lot of the bills such as council & water rates, electricity, gas, maintenance, car insurance, fuel, food, etc. These figures make no allowance at all for things like superannuation, job loss, medical expenses.

I live by my self i pay $570 a month for a room. but yea i get the idea. lenders wont really care. i will just buy in one of my parents names.

 

[Peter_Tersteeg]

I live by my self i pay $570 a month for a room. but yea i get the idea. lenders wont really care. i will just buy in one of my parents names.

Unfortunately lenders criteria aren't the same criteria borrowers use and ultimately they're the one with the money so it's their rules.

Let's look at this another way.

You want to borrow $250,000. P&I @ 7.5% = $1,784 / month.

You currently pay $570 / month rent. The difference is $1,214 / month.

If you can demonstrate you're consistently saving $1,214 / month over a 6 months period, there's probably lenders who will fund it.

 

[Corey Batt]

I'd sooner increase my income from 28k than put a purchase in a parents name. Using another individuals name to make a purchase provides long term issues which can be painful and expensive, especially if you were to transfer ownership names in the future, ie repaying stamp duty etc.

 

[D.T.]

Surely anyone can bump their income up a little from that level?

 

[Mick C]

my income is 28.6k p.a

what is the best loan capacity i could get with a 20% deposit and my dad going guarantor? he's a high income earner. and what interest rate would i roughly be on.

I have no debt
good credit history
full time employment (wages)
would be for PPOR
20% deposit in my bank account to show i saved the money.

thoughts brokers?

ANZ is probably the only lender that will allow "Servicing" guarantors from parents to service max 40% of the loan without being on title. So you need to service up to 60% still.

But there are a few restrictions ( ie your parents needs to have a certain min income depending on age and also it will be subject to ANZ assets test)

Rates and fees are the same. Just subject to eligibility.

Cheers

 

[tj22]

Surely anyone can bump their income up a little from that level?

I'm a 3rd year apprentice plumber. Hoping to be on 50k p.a income in 10 - 14 months from now.

 

[Corey Batt]

I'm a 3rd year apprentice plumber. Hoping to be on 50k p.a income in 10 - 14 months from now.

Circa a year isn't that long, if you believe you're going to be on the substantially higher wage when finishing your trade (likely), it may pay to bide your time.

 

[magic]

Cost of living for a single is at best $1091 per month, or $13,092 (based on various poverty line indexes).

Does the $13,092 for a single person include the rent they pay or do you need to add rent on top? Or is it for someone living at home with their parents?

 

[Vixs]

It's not including accommodation (either rent or mortgage).

They're looking at the minimum cost of living post-purchase, not so much right now.

 

[Peter_Tersteeg]

Does the $13,092 for a single person include the rent they pay or do you need to add rent on top? Or is it for someone living at home with their parents?

It's not including accommodation costs. It's the bare minimum to feed yourself, get to work, keep the electricity on, etc.

Even if you're living with your parents, quite a few lenders will include a 'nominal' rental amount of $650 / mth on top of this.

 

[Redom]

An alternate strategy may be to purchase NRAS and use particular lenders who accept it for servicing. Adding in a couple 5ish-8k to your servicing can potentially push a deal over the line for you

You'd likely be contained to lower end NRAS stock, but thats where the cash flow is at its premium anyway. Yields are often higher at this point too.

Not ideal to be constrained or pushed to this strategy, but it MAY open up AN option for you.

 

[tj22]

what do you guys think,

i have spoken to one broker and he has said i could borrow 60k

i thought this was way off so i went to another broker who said i could borrow 170k which seemed more on the money.

what do you guys think? how can brokers be so far off with a loan capacity?

 

[Shahin_Afarin]

Quite normal depending on what info the brokers are using and how they are structuring the loan.

Is this for an IP or to live in? If its for an IP and you get say $300 per week rent then you could go up to $225,000 loan amount (with the limited information provided).