My wife and I have 2 properties and are both PAYE employees. We are thinking of buying an established business for my wife to run. This will double her income and I'll continue with my job. How will banks look at it in terms of serviceability? Is there a minimum amount of time that you need to have the business before getting loans for investment properties?
Serviceability after buying an established business
- Thread starter Ryan80
- Start date
Established business you should have more chances of borrowing then start up. Banks will usually want 2 years financials of your own not previous owner. But given it's established there would likely be grounds to still borrow. The overall application would need to be pretty strong, given that you're still a PAYG would assist. Is your partner staying in the same industry? Does her PAYG income relate to the business, same industry?
If not likely 1 year then you would be alright, again pending app.
If not likely 1 year then you would be alright, again pending app.
You are going to need:
1. Last 2 years company financial returns
2. Copy of the Lease Agreement
3. Cashflow projections prepared by your Accountant
4. Business Plan confirming risks, staff roster, location of business, etc
5. Resume/CV for your wife
Rates are going to be dependent on a lot of things but around 9.5% as a guide.
LVR is going to 50% max (more for franchises).
1. Last 2 years company financial returns
2. Copy of the Lease Agreement
3. Cashflow projections prepared by your Accountant
4. Business Plan confirming risks, staff roster, location of business, etc
5. Resume/CV for your wife
Rates are going to be dependent on a lot of things but around 9.5% as a guide.
LVR is going to 50% max (more for franchises).
Don't think you have read the OP don't think they're talking about borrowing for the business, but later investments once the business has been purchased. That's how I read it.
I think you didn't read the post. He's asking about future serviceability after buying biz, not for the buying of the biz.
Snap. (10char)
Depends on the overall strength of the application (LVR, occupation, existing customer, etc). Generally require 2 years financials but can get away with 1. It is good that one applicant is PAYG this certainly helps.
Ok thanks guys.
Yes I was referring to buying properties after buying the business.
The business is currently run under management but my wife was going to either take an active role full time or continue under management.
In regards to financing the purchase of the business - this I'm still unsure on. We are up to 90% on both properties so can't use them. We do have savings but would like to avoid using that but of course if that's the only way then we'll have to do it.
The business is a takeaway in an established area purchase price 200k.
Yes I was referring to buying properties after buying the business.
The business is currently run under management but my wife was going to either take an active role full time or continue under management.
In regards to financing the purchase of the business - this I'm still unsure on. We are up to 90% on both properties so can't use them. We do have savings but would like to avoid using that but of course if that's the only way then we'll have to do it.
The business is a takeaway in an established area purchase price 200k.
You'll definitely need at least 1 year full financials after operating on your own. If this is consistent with the previous owners last year (or two), you've got a shot but it's not guaranteed.
A lower LVR helps, don't go after more than 80%. The type of business, how tight servicing is, other little things in the overall application can all make an impact. You're after a policy exception, it happens all the time, but the deal needs to be sold to the lender and you're not going to get a solid answer until they assess the application.
A lower LVR helps, don't go after more than 80%. The type of business, how tight servicing is, other little things in the overall application can all make an impact. You're after a policy exception, it happens all the time, but the deal needs to be sold to the lender and you're not going to get a solid answer until they assess the application.
You will have an extreme hard time geting finance for this unless you have a property you can draw down on.
