Plenty of equity but no servicability

Same old problem I guess. But I'm trying to finance a new purchase that is a great opportunity for me. My broker Is finding that I'm failing the banks' serviceability (by a fair bit - although I can afford it).

I would have thought that an equity lend or lo doc would be a simple option but apparently they are harder to get now or rate are in the order of 11%!

Any creative ideas on how I can finance a 80% lend on the new place an aviod the servicability issues?

Cheers
McBrain
 
yeh getting these lends seems pretty difficult now hey? and at 11% you would want to be dam sure of your gorwth or value add.
 
Plenty of equity isnt quite enough.... At 60% it gets simpler.
At 80% some lenders have some flexibility with their income assessment, a lower level of number of documents required, perhaps working off a rental estimate letter instead of a lease agreement, stuff like that. It may be a case of re arranging the current lending with diferent lenders to increase serviceability for the new purchase.
 
We have the same problem, and at this exact moment (I'm 38 weeks pregnant and not doing anything besides sitting around) we genuinely cannot service anything anyway and it is a struggle to save anything.

Fast forward a few months we'll be fine BUT - worst case scenario it'll be 3 properties each on a 60% lo-doc loan, and the reason we'll be fine is the rent will easily cover all outgoings on all 3 properties. Right now this just isn't the case, we're still being crazy in ultra-scrooge budget mode trying to scrape up as much of the 40% deposit as possible to minimise how much we need to borrow.

Your best bet is to get creative upping your deposit from 20% to 40% from some nefarious means.
 
Well, I could stretch to 40% but I want to keep a buffer and I'll need it for other things ( business, etc ).

It's very frustrating as we weren't looking for the next ip but the house over the rear fence of my ppor has come up and I always said I wanted to get it and have a great value adding opportunity.

11% is unfeasable. What about cashbonds and the like, are they still available/used?
 
Well, I could stretch to 40% but I want to keep a buffer and I'll need it for other things ( business, etc ).

It's very frustrating as we weren't looking for the next ip but the house over the rear fence of my ppor has come up and I always said I wanted to get it and have a great value adding opportunity.

11% is unfeasable. What about cashbonds and the like, are they still available/used?

should still be able to 80% on low doc purchase pretty easy, do you have abn and gst registered for 12 months?
 
I have said it b4, and that is many people think they are put of serviceability because their lender(s) or a broker or 2 has said so.

Often true, but often as well, there are ways to make it work.

ta
rolf
 
Lodoc loans at 11% think your Broker should be changing lenders.

Lodoc 80% is still available at circa 7% without BAS or Trading Statements.
 
should still be able to 80% on low doc purchase pretty easy, do you have abn and gst registered for 12 months?

Got abn but not registered for gst so less than $75k pa.

Sounds like I need to push a bit harder with finding other products. My broker is really good but if there is a viable option I need to investigate it.
 
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I have said it b4, and that is many people think they are put of serviceability because their lender(s) or a broker or 2 has said so.
You know, we're just assuming too ... the broker we talked to didn't even ask our income.

With rent from the other house we'd be sitting at about $70k gross household income, 3 dependants, $260k of assets securing $140k of IP debt from one bank, and needing $80-90k debt to buy a $250-300k PPoR with any other bank. Messy because only $80k of the larger debt will actually be deductable, but you do what you gotta do. I should probably try and borrow $60k more for the new house and pay down the old ones just so the loans are compartmentalised better and I don't need to split out fractions of interest accrued come tax time.

Does that sound doable, serviceability-wise? All lo-doc 60%, declared income.

Edit: oops, forgot we get more FTA and stuff with 3 kiddies that adds to our income total. And with the baby bonus and all the other kid-related tax return crap we're expecting come July we can probably lop another $10k off what we need to borrow.
 
McBrain

I suggest you approach a few different banks direct and ask them how much they would be prepared to elnd you. You'd be suprised at how different their serviceability requirements are.

I had a situation once where one bank offered me over 3 times the loan amount (with a refinance of another property) than another bank. I gave them the exact same set of information. Figure that ...
 
3 properties? That's nearly as many as me.

Doesn't sound like you're expecting that big crash any more...
I paid $25,000, $65,000 and $10,000 for those three properties and will need to cough up another $110,000 soon to complete the third. That's a debt of $220k that will get me loosely $16-22k rent per annum - near paying for themselves at current interest rates.

Their combined value in this bubble will be well over $560,000, but only after the third (which will be worth the most by quite a margin) is finished.

I can take some pretty serious bubble bursting before I get concerned :p
 
Still available for getting you across the full doc line .

Has this worked recently for anyone? I tried it with ANZ and they came back stating income needs to be demonstrated for 2years.

Is there a creative way to make this work / pass the damn serviceability calcs? or another bank that accepts this without fuss?
 
ANZ only need one years financials for self employed full doc loans, although they still need to show they have been in business for at least two years, with ABN and gst registration etc.
 
Got abn but not registered for gst so less than $75k pa.

Sounds like I need to push a bit harder with finding other products. My broker is really good but if there is a viable option I need to investigate it.

And if registered for GST they will probably expect that you are lodging BAS and will want to see financial statements, BAS statements and/or accountant’s letters
 
If you can't afford it don't buy it. :D

Depends who decides the serviceability!

If someone is nice enough to give us a loan for $100k, we'll end up with around $280pw in payments for all three loans combined, and $330pw (or more than $400pw if I rent one house out furnished) rent incoming.

Unfortunately for the next few months we're going to have a major income dip with the new baby so our *other* income is down (FTA/baby bonus of course will be up) and we probably don't make the serviceability mark, so we're just going to try and save up the last $14k we need to make a 40% deposit and go lodoc 60. Be much less than $14k if house prices in this area keep tracking up or more if they go down, that figure is very valuation-dependant.

And yes, that's a pretty stupid statement ... "hi, the bank says I can't pay an extra $140pw so we're going to save up over $500pw for 6 months so we don't have to prove we can pay $140pw".
 
Plenty of equity but no servicability

If you can't afford it don't buy it. :D

So by that logic, when 100% loans were available, casual temporary or any sort of income was used by lenders, there was no GST/ABN requirements on getting a low doc loan, that they therefore could have a afforded it then, but not now because the credit environment changed?

There are 2 questions to ask, does the potential borrower feel they can afford the loan? and can we convince the lender they can afford the loan. Shortly we will also need to ask whether the loan is not 'unsuitable', or whether we can also justify the borrower can afford the loan.
 
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