Quitting job in 3 months time – Buy now or wait?

[devank]

Hi,
Restructure is happening at work. Everyone’s PDs (Position Description) are re-written. What that means is that I will have the option of not applying for any positions.

These are our situation:
Equal double income (100-110K each) family.
5 dependents (3 under five & 2 over 60).
About 1.5Mil Loans @ 80% LVR.
Buffer: 90K in offset & 20K in shares
Currently about 5K negative (after negative gearing) overall from property investments.
Age :38

I’m fairly confident that I will be able to find a suitable job soon after but who knows.
There is a slight possibility that new PD can come out as similar to old role hence directly appointed. I prefer to take the handout (~ 50K) and find another job given I have already spent 5 years here.

Banks are happy to lend now but I’m not sure how long I need to wait after getting a new position.

In this situation, would you buy another IP (< 400K) now?

 

[tobe]

me? I would certainly get all available cash out of existing properties and get ready to buy again. I might buy again if the property was a screaming bargain, or added significant cashflow.

 

[Peter_Tersteeg]

If you're essentially moving to the same position with a new employer, the CBA will usually be fine as long as they can see a couple of payslips. A few other lenders can also be okay with this. This scenario can be a little hit-and-miss however, because it can also be dependant on the risk rating (credit scoring) of the deal.

Other lenders will want to make sure you're out of probation, especially if you borrow more than 80%.

The other way to do it is to buy before you quit your job, or at least get a pre-approval before you quit and purchase before the pre-approval expires and they require more documents. Be careful in this scenario as if the bank performs an employment check, you can be left out in the cold. Many lenders don't bother with an employment check but it's best to play it safe and have a finance clause to get out of the deal if you need to.

From a 'responsible lending' position, you probalby should wait until you're firmly in a new job (out of probation). As a minimum, make sure you've got strategies to cope with your living expenses and loan repayments in the event that you don't get a new job quickly.

 

[westminster]

Remember that in the mortgage documents that you sign that you need to declare future changes to your situation that will be known.
Whether you declare or not is up to you but it is there.

 

[Peter_Tersteeg]

Remember that in the mortgage documents that you sign that you need to declare future changes to your situation that will be known.
Whether you declare or not is up to you but it is there.

It's not actually in the mortgage documents, but it is in the loan application. They generally ask if there'll be an adverse change in the future and for a mitigant.

About 2 years ago I worked with a client who was expecting a reduction in income for about 6 months. It was anticipated and planned for, but in the interests of being honest, we declared it in the electronic application, along with what was in place to ensure it didn't become a problem.

The banks electronic systems immediately declined the application and we were unable to appeal the decision. They simply weren't interested in listening to reason.

As a result we now state that there won't be a problem in the application itself, but we disclose it in the application notes. Responsible lending is a human decision, not a computer one.

 

[devank]

Thank you tobe. Yes.. I have drawn out all the equity possible.

Remember that in the mortgage documents that you sign that you need to declare future changes to your situation that will be known.

I don't think 'potentially losing a job' can come under this. I thought it was more like 'having a baby' or already received a termination notice.

From a 'responsible lending' position, you probalby should wait until you're firmly in a new job (out of probation). As a minimum, make sure you've got strategies to cope with your living expenses and loan repayments in the event that you don't get a new job quickly.

If a person comes to you with my scenario, would you take on the job?

 

[Rolf Latham]

Responsible lending is a human decision, not a computer one.

Frame that Pete

I really like it

ta
rolf

 

[Aaron_C]

If a person comes to you with my scenario, would you take on the job?

Grey area

 

[imbi3]

Being a conservative person, I would wait
If you must buy, obtain the pre-approval now. Otherwise, best to wait until you have finished probation in the new job - for your peace of mind as well

 

[Deltaberry]

You're young. Buy again.

 

[Peter_Tersteeg]

From a 'responsible lending' position, you probably should wait until you're firmly in a new job (out of probation). As a minimum, make sure you've got strategies to cope with your living expenses and loan repayments in the event that you don't get a new job quickly.

If a person comes to you with my scenario, would you take on the job?

If we had a discussion about it and I genuinely felt that meeting the repayments on an ongoing basis wouldn't be a problem, I'd have no problem writing the loan.

 

[devank]

You're young. Buy again.

If we had a discussion about it and I genuinely felt that meeting the repayments on an ongoing basis wouldn't be a problem, I'd have no problem writing the loan.

So I did....Thank you all. Bought a cheap one

 

[westminster]

So I did....Thank you all. Bought a cheap one

congrats!!!

 

[devank]

congrats!!!

Thanks. Slowly plotting along

At the job front, my position (along with the whole section) is abolished. Now I will have three choices :
1. Apply & win another job at the same place (Already finished 5 years) ? I get to negotiate the pay
2. Apply & not win a job - Most likely redundancy (about 30 weeks of pay)
3. Not apply for any jobs? I will be stuffed (moved) around but that could be a good learning opportunity too!

So.. I think I?m ok with any outcomes really

 

[EN710]

Thanks. Slowly plotting along

At the job front, my position (along with the whole section) is abolished. Now I will have three choices :
1. Apply & win another job at the same place (Already finished 5 years) ? I get to negotiate the pay
2. Apply & not win a job - Most likely redundancy (about 30 weeks of pay)
3. Not apply for any jobs? I will be stuffed (moved) around but that could be a good learning opportunity too!

So.. I think I?m ok with any outcomes really

30 week redundancy pay? If it's me I will choose #2 lol, then apply for new jobs - you will get the outcome #1 and then #3 (new job & new things to learn)

 

[devank]

30 week redundancy pay? If it's me I will choose #2 lol, then apply for new jobs - you will get the outcome #1 and then #3 (new job & new things to learn)

That is what exactly I'm doing. I will be able to leave anytime between March & Jun with a payout.
I will get about 4 months of leave + 6 months of termination pay coming in this financial year. That is equivalent to 22 months of pay in this financial year but I may not get full income for next financial year.
Any smart strategies to better manage the tax?

 

[jrc77]

DevanK,

Can you ask them to hold your payout until July (running down leave from your finish date) so that the big payout is next financial year?

Alternatively, you could look at bringing forward any investment expenses. ie prepaying interest to bring them into this FY.

JAson

 

[devank]

Can you ask them to hold your payout until July (running down leave from your finish date) so that the big payout is next financial year?

Alternatively, you could look at bringing forward any investment expenses. ie prepaying interest to bring them into this FY.

I tried both but no luck.
1. Everyone else is finishing in a month. At early stage, I said I would prefer July 2014. My boss tried their best to extend but the Finance people wouldn't go beyond July for budgeting reasons.

2. All our IPs are in joined (50:50). It is discussed in this thread.
My wife is in opposite situation to me. She's been part-time this financial year but full time next year. Her full time income is about 1.3 times higher than mine. So paying interest early works against her.

Only option seems to be getting into an investment on my name alone and prepay the interest. That seems a little risky without finding a new job.

 

[Scott No Mates]

Only option seems to be getting into an investment on my name alone and prepay the interest. That seems a little risky without finding a new job.

You've got close to a years income coming to you between March and June. Buy now, whack some into super (concessionally taxed), park your payout in the offset account and draw down until you find a job.

Are you going to be reapplying internally?

 

[devank]

whack some into super (concessionally taxed), park your payout in the offset account and draw down until you find a job.

Are you going to be reapplying internally?

I'll look at the tax rates for super contribution. I'm 39 this year. I'm 25 years away from accessing it. Do you still think so is it worthwhile to do so? Maybe it is ok if I start SMSF in the future ehh?

Offset - That is the only option if I don't do anything else. We kind of rent. We don't have any 'home mortgage'. All our loans interests are tax deductible.

No, I'm not applying for any internal positions. Handout to too attractive
It may take min of years to save this handout (as long as I find another job).