Will I get finance to keep current PPOR as IP?

[allie181]

I have a unit (current PPOR) valued at $310,000 with a home loan of $242,000 (i.e. 68,000 equity).

I have purchased a new property for $443,500. With stamp duty and mortgage insurance, I'll need a loan for $472,000. (Contract is unconditional and settlement is on 2 Sept)

I was planning to sell the unit but it didn't sell at auction yesterday so I have asked my mortgage broker to find out if I can get approval to keep the unit as an IP. He said it will be fine, but I'd just like a second opinion so I can stop stressing out about my upcoming settlement.

My income is $88,000 and I estimate I'll be able to rent the unit out for $280pw i.e. $14,560 pa. So my total income will be $102,560.

I plan to refinance the loan on the unit to an interest only loan as I intend to sell it within the next few years when the market picks back up (before the 6 year CGT rule kicks in).

Based on the equity I have in my unit, my salary and the rental income, will I get finance?

Thanks.

 

[Rolf Latham]

I have a unit (current PPOR) valued at $310,000 with a home loan of $242,000 (i.e. 68,000 equity).

I have purchased a new property for $443,500. With stamp duty and mortgage insurance, I'll need a loan for $472,000. (Contract is unconditional and settlement is on 2 Sept)
/QUOTE]

Hi Allie

Income and serviceability aside for a moment, for without knowing what your actual expenses and actual income are ( via budget), its hard to comment on that side of it, though on a best case scenario it does look very skinny, and if you were my client, on this data, id have my skates on to find a solution.

Your total end loan amount at the moment looks like 242 + 472 = 753 k on a total valaution of 753 = 94.8 % lvr

The equity position also looks tight since you may need to pay a busload more LMI on the unit ?

Doesnt look rosy, but hard to judge from here.

Jump on the brokers phone asap and get them to send you an email explaining how they will make it work and with what lender etc

ta
rolf

 

[allie181]

Thanks Rolf, that's what I was worried about.

Regarding my own financial commitments, I only have 1 credit card with a $10k limit (currently has 1.9% interest, which will last another 12 mths).

I am single with no dependents and live fairly cheaply.

The reason I bought the new house is that my mum has taken ill and is unable to work at the moment, so she and my 2 brothers will be moving in with me. They'll be paying $200 p.w. to cover food & bills, but I don't think I can count their $600pw as rental income.

Bugger.

Looks like I'll just have to do short-term bridging and keep my property on the market and try and sell it ASAP.

It is valued at $310k. I wanted $330k because the $310k valuation doesn't take into account a full bathroom reno, but perhaps I need to just try and cut my losses and see if I can get $300k for it.

 

[Bradsdad]

I have a unit (current PPOR) valued at $310,000 with a home loan of $242,000 (i.e. 68,000 equity).

I have purchased a new property for $443,500. With stamp duty and mortgage insurance, I'll need a loan for $472,000. (Contract is unconditional and settlement is on 2 Sept)

I was planning to sell the unit but it didn't sell at auction yesterday so I have asked my mortgage broker to find out if I can get approval to keep the unit as an IP. He said it will be fine, but I'd just like a second opinion so I can stop stressing out about my upcoming settlement.

My income is $88,000 and I estimate I'll be able to rent the unit out for $280pw i.e. $14,560 pa. So my total income will be $102,560.

I plan to refinance the loan on the unit to an interest only loan as I intend to sell it within the next few years when the market picks back up (before the 6 year CGT rule kicks in).

Based on the equity I have in my unit, my salary and the rental income, will I get finance?

Thanks.

Did he just? As Rolf has mentioned things on the surface look pretty tight to say the least.
Who is the current lender? It looks like you need 95% + LMI which means the IP would need to be via your existing lender as I know of nobody that will rifi 95% + LMI.
I assume your existing property was passed in on a vendors bid. What was this? This could have an affect on the valuation.

Your idea of selling a little cheaper is sounding like a good idea on the surface and could well see you in front compared to not being able to complete settlement.

Regards
Steve

 

[allie181]

Emailed my broker and said I had done the numbers and didn't think I'd get finance to keep both approved given that the LVR would = 94.8%.

His response:

"Banks will go up to 95% but there will be Mortgage Insurance involved."

Regardless, I've said to just organise bridging whilst I get the unit sold. Even *if* a Bank did agree to lend me this much I think I'd just be asking for trouble! (No wonder people get into trouble and over extend themselves!)

Now I am concerned about how much I can rely on my broker's advice. Will I likely get bridging finance to allow me an additional few months (up to 3 - but I doubt I'll require that long) to sell the unit?

 

[JohnHenry]

Emailed my broker and said I had done the numbers and didn't think I'd get finance to keep both approved given that the LVR would = 94.8%.

His response:

"Banks will go up to 95% but there will be Mortgage Insurance involved."

Regardless, I've said to just organise bridging whilst I get the unit sold. Even *if* a Bank did agree to lend me this much I think I'd just be asking for trouble! (No wonder people get into trouble and over extend themselves!)

Now I am concerned about how much I can rely on my broker's advice. Will I likely get bridging finance to allow me an additional few months (up to 3 - but I doubt I'll require that long) to sell the unit?

Wow that's cool, which bank can give you 94.8% LVR for interest only loan ?

I also been looking for similar type of loan as I'm now renting out my PPOR thus making it as my first IP.