My borrowing capacity

[m.sewell]

Hi guys,

I am looking to buy again and would like to know what I have to play with. Help would be greatly appreciated.

PPOR loan $230k - value $330k

IP 1 loan $370k - value $490k ($525 week rent)

IP 2 loan $200k - value $260k ($300 week rent)

IP 3 loan $405k - value $430k ( $460 week rent)

$200k income
$50k savings
No children
No other loans
No credit card debt


Cheers, Mitchell

 

[Peter_Tersteeg]

Personal income?
Rental income?

 

[Jess Peletier]

Very rough and dirty, but pretty much as much as you want, unless you're borrowing from ING or Bankwest.

Average seems to be around the $8-900k mark, but some go up into the $1.2M+'s.

If it's for an IP, even more as there's no proposed rental income included in that.

This really needs to be put in the context of your portfolio and plans, as the most generous lender is not likely to be the ideal one for you so please get proper advice before going shopping.

 

[Peter_Tersteeg]

Affordability doesn't appear to be a problem, as Jess has indicated.

The equity position in your current portfolio appears to be okay, but not huge. Unless you've got more funds elsewhere, the deposit and purchase costs will be the real challenge here.

The existing portfolio might (might not) be cross collateralised as well, which could cause some challenges if you are looking to use equity for the next deposit.

 

[m.sewell]

All loans are with ANZ and are not crossed. Next property will be an IP and I plan to keep accumulating properties. Should I stay with ANZ as long as possible?

 

[Peter_Tersteeg]

All loans are with ANZ and are not crossed. Next property will be an IP and I plan to keep accumulating properties. Should I stay with ANZ as long as possible?

Technically nothing wrong with the ANZ, but as I'm sure you're aware, there are more generous lenders out there. A deeper analysis of your borrowing capacity along with some projections of your future goals and overall equity position and strategy would be required to really advise properly if you should keep going with the ANZ.

 

[Redom]

Some considerations:

Your borrowing power is pretty strong and shouldn't hold you back until much further in your investment journey/when there's changes in the market. I've done a quick test of your serviceability with ANZ and it is pretty strong (circa $1 mill).

One consideration that brokers factor in when recommending loans for investors is whether they'll be able to release equity from the property down the track. This may be particularly important for you given that you're paying LMI on your properties. In terms of lender choice, ANZ treat debt they hold themselves and debts held with OFIs reasonably similarly. So as you increase your debt holdings, unless your yields are spectacular (8.5% yields), you'll be soaking up your borrowing power with ANZ regardless of whether you hold your mortgage or not with them.

You're likely to benefit in terms of rate/fees with ANZ, and i wouldn't be too concerned with concentration risk at this point (but would be after another property with ANZ).

Cheers,
Redom

 

[Rolf Latham]

one thing that is worth addressing is those great yields.

some lenders will mark them down to more like 6 % as maxes, trying to weed out mining town income etc.

can be overcome where you have dual income props

ta

rolf

 

[Rolf Latham]

Should I stay with ANZ as long as possible?

my small view coz I dont use them that much anymore


Pros

OK with cash out
Desktop vals many times
Contract value for some times


Negs

Try an IO extn when you are beyond their weeny servicing capacity
Mandatory Credit card when on their breakfree package
Cobol


ta

rolf

 

[m.sewell]

Thanks guys this gives me something to think about.

Cheers, Mitchell