Maximum borrowings of $2.5M????

[Land]

I've heard somewhere that the maximum that a professional couple ($150K-$200K combined income) could potentially borrow on full doc loans would be about $2.5M, no matter even if the properties were positively geared. i.e. that's the maximum exposure the banks would give you.

Is there a limit to the amount one can borrow if the serviceability stacks up, just from a 'maximum exposure' point of view?

 

[Aaron Sice]

i guess that all depends on your bank and your standing with them.

if you're just goign thru a broker then i would say "yes", but if you know your bank manager's phone number and first name then i would say "try again".

 

[Pete]

It depends

I know my bank manager, but bank wouldn't go to M$2.5 for me. Still, with no doc loans a futher couple of million was found elsewhere. Solely for buy & hold residential properties.

I think for different purchases it'd be different, And I guess depending how far down the wealth road one is.

 

[grossreal]

hi Land
the answer to your question is yes to some extent.
to get over the issue of serviceabilty is to put 12 months of loan repayments into the bank that is doing the loan.
this then solves this issue.
for me I use the deposit by the tennant as part of this 12 months cost coverage.
as for this is the max exposure.
simply the answer is no its not and would take to about 3 pages why.
if in reality I had to service all my loans on a wage or income
the bank manager would have a heart attack and his boss would not go to the funeral
the issue is not the loan amount or for that matter the lender its
a. the structure used
b. the income and coverage( not yours but your client or tennant)
c. risk
d. lvr
e.networth of the person thats applying ( are you a straw man)
and then underpin your position wth term deposits.
max borrowing of 2.5 mil
try 5 mil no income and bad craa.
loan going thru
and no not me
or try 25mil
single director,
1 day abn,
the director is in liquidation
the new company pays out liquidator,
the lender jv's with the liquidated director and is going to be building 75mil project and the new companies single director is the same director.
and is in cbd sydney.
now thats fun.
alot tank at 5 mil but not many at 2.5mil but maybe have a chat with a commercial broker.
( make sure you understand that there are good and bad comm brokers )
hope you well
at 2.5mil you are getting into commercial broker markets.
not sure if this is just a question or you are into 2.5mil borrowing

 

[Pete]

Appreciate your comments, grossreal. Thank you.

regards

 

[asdf]

Appreciate your comments, grossreal. Thank you.

regards

Whaat?? You actually understood it? I always bring in a UN linguist to interpret gross' posts...

 

[Dazz]

.....whatever it takes asdf I reckon.

GR drops some absolute gold every now and again.

He's on a different level altogether from most of us ordinary investors.

Some people in the past have reckoned he's a bit dodgy, but I've certainly gleaned alot of excellent conceptual wealth tactics from his posts.

Yes he writes funny and yes it's a pain in the @ss sometimes to decipher, but often it's well worth it.

 

[scamp]

See my post on :

http://forum.globalhousepricecrash.com/index.php?showtopic=32698&view=findpost&p=301182

I can borrow up to 2.2 million dollars if I wanted to.
The question is : What would I borrow myself ?

I would safely borrow myself about 400.000 AUD$.
that's taking into account the fact that unemployment is on the rise, that interest will go up , that oil and food stay high.

Will I borrow 400.000 ?.. no. Why not ? Because there's no reason for me to borrow at current 9% interest rates.
Property is surely not going to go up more than 1% this year, thus I would lose a lot of money if I were to borrow money.

 

[Lake]

See my post on :

http://forum.globalhousepricecrash.com/index.php?showtopic=32698&view=findpost&p=301182

Property is surely not going to go up more than 1% this year, thus I would lose a lot of money if I were to borrow money.

What??? Properties won't go up by 1% nationally in Australia this year? We've already smashed through 1%, and it's not even half way through the year yet.

 

[HiEquity]

Getting back on track...

Please don't hijack the thread to discuss where prices are going - I for one am very interested in this borrowing limit based on full doc resi buy and hold coz that has been our strategy and is close to where we are at.

We have hit a number of bank's serviceability barriers (which is nowhere near my calcs of where we are at or what we can afford!) and am sensing our only way to keep going forward is to go commercial for more reasonable yields... or we could just use up our equity on further no-doc resi but wouldn't that put us even further behind on any future serviceability tests? Particularly as we have an aversion to buying anything without a significant land component...

Thanks for the advice so far guys!

 

[Land]

Scamp - got lost!!

HiEquity, I think that once we max out on full-doc, we're going to have to move to low-doc and then n-doc. I guess we're just trying to get the highest LVR possible for as long as possible so that we can maximise our exposure to the Sydney market for when it finally rises.

 

[steveadl]

Property is surely not going to go up more than 1% this year

Then you're looking at the wrong property!

 

[HiEquity]

HiEquity, I think that once we max out on full-doc, we're going to have to move to low-doc and then n-doc. I guess we're just trying to get the highest LVR possible for as long as possible so that we can maximise our exposure to the Sydney market for when it finally rises.

Fair enough - I tend to agree about maximising the exposure at the moment - I guess we shouldn't be too precious about how we grow the portfolio and shouldn't blame the banks for waayyyy overestimating how much we spend on ourselves... but then the other attraction of higher yielding commercial is it's a bit of a hedge if CGs take a lot longer to turn out than hoped for in that we don't lose so much in the meantime! Not that commercial / industrial is not without risk of course...

Cheers

 

[Land]

Apologies Y-man

I must apologise, I am guilty of getting too personal as well. Sorry Y-man.

 

[pieman]

Anyone with an IQ above 90 could see that if your income is a combined 180k then there is no way in the world that you could service the 180k odd interest that 2.2m in borrowings would generate.
Scamp, do me the favour and p@55 off to the land of whinges where everyone doesn’t have a bean to rub together but insists on bringing down anyone that has had some success in property investment.
Cheers
pieman

 

[Land]

Pieman, how would you know that an income of $180K couldn't service the debt? I mean PAYE income, not including the rental income. We develop to retain which gives a very high yeild and leaves a very small shortfall. So yes, that kind of debt can easily be serviced....

 

[pieman]

with no rent 180k income will not service non-deductable debt of that amount without capitilsing the interest. I owe seven figures and earn 200k+ but i have rent to help serice the debt. Thats the difference.
pieman

 

[BayView]

See my post on :

http://forum.globalhousepricecrash.com/index.php?showtopic=32698&view=findpost&p=301182

I can borrow up to 2.2 million dollars if I wanted to.
The question is : What would I borrow myself ?

I would safely borrow myself about 400.000 AUD$.
that's taking into account the fact that unemployment is on the rise, that interest will go up , that oil and food stay high.

Will I borrow 400.000 ?.. no. Why not ? Because there's no reason for me to borrow at current 9% interest rates.
Property is surely not going to go up more than 1% this year, thus I would lose a lot of money if I were to borrow money.

If I could borrow $50 mill tomorrow - and the numbers would have to be right - LVR, cashflow, future cap growth potential etc, and risk management is at a premium, I would borrow it.

I have no doubt there are investors out there borrowing this much as we speak, but they are in a different financial level than most. And they got there by observing the market conditions and taking action when an opportunity presented itself. We are about to begin an enormous opportunity cycle - according to your predictions, and you're gunna sit on your check book?

It's all about the mindset. All you see is gloom and doom, soaring rates, plummeting house prices, people losing their homes and so on.

I see houses about to become very cheap in some areas, and no buyers to buy them. I can't wait.

 

[soyabean]

Is there a limit to the amount one can borrow if the serviceability stacks up, just from a 'maximum exposure' point of view?
We fit your profile of salary employees with combined income about 200K. We have a 3M + debt and a 1M+ LOC, all with one bank, so the 2.5M limit is not really true.
Regards,

 

[Land]

Thanks Soyabean!!!!!

Thankyou very much for your personal contribution, seriously, that's exactly the kind of feedback I was looking for. Good to know.

LA - I love your take on things. I can't stand people who sit back and criticise those people who have a shot at things in life. I have huge amounts of respect for the person who has a go and loses everything, than the one who sits on the fence. Life is for living and is so damn short it's incredible.

Life's short - invest hard!!!