PI Friendly Lending Institutions?

From: Alan Hill

I've just been going through doing my tax for the year and having a closer look at cashflow taking into account existing property investments.
As always it seems it's not your real Investment Capacity(Total Income - Total Expenditure) or even your LVR that limits your next purchase, it's really your Affordability Index or Cashflow AS THE MAJOR BANKS CALCULATE IT that will limit the financing of your portfolio.
Now from my limited exposure to many of these lenders, it would appear your Affordability Index is often calculated as the ratio of Home and Investment Loan Payments to your income(where income is considered to be approx. 30% of your salary income and 80% of rental payments). Keep this ratio below 100% and your in with a chance.
The obvious things missing from the Income section of this ratio though is your Cash Deductions(Interest and Property Expenses) and your Non-cash Deductions(Building, Fittings and Loan Costs) which can quite easily run to tens of thousands of dollars. Include some or all of these and suddenly your borrowing capacity looks considerably enhanced! The banks are quite happy to use your current income as a basis for loan approval but don't seem to think these other deductions are valid when really they are every bit as certain as your income. A valid Quantity Surveyors report should even 'firm up' the Non-cash deductions to being just as certain as your income.
I'd be interested to hear(especially from some of our more experienced and successful investors) some of their experience/advice with the financing side of their portfolio development. ie. are there particular lenders out their who are PI friendly, who do take into account some or all of these various deductions or vary some of the percentages a bit?
Obviously there are a variety of factors that will make one lender more appealing to a particular investor over another, and it often makes good sense to discuss your individual circumstances with a good Mortgage Broker(you know who you are and yes I'm having a red at the moment!), but just for the hell of it, let's throw the voting open.......
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Reply: 1
From: Sam Coster

Great message.
I have the same problem with my personal
PI's, each one is fully furnished to maximise
return, but when it comes to Vals,
1. They dont take into consideration furniture
2. Rental income from serviced apartments,
even if good track record.
3. I recently applied for a increase in a
loan from one of my existing lenders, a
Building Soc and because the last time this
happened was over 6 mnths ago I had to
produce a full set of proof of income and
proof that I had not increased my dependants
since I last spoke to them.(produce my
Medicare Card)

Enjoy the journey, its half the fun.
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