My current situation:
My Assets:
3×2 in Merriwa
– Mortgage owing on property: $120,000.
– Market value $180,000 – $190,000
– rented out at $165 a week.
– Mortgage is $170 a week.Own 50% of a block in Yanchep (Other 50% is parents):
– Mortgage owing on property: $115,000
– Market Value $150,000 – $170,000
– The merriwa property was used as guarentor for this mortgage.
– Mortgage is $770 a month (I pay 50% of the mortgage so I pay $385 a month)My Current Situation:
– Living with parents in Mindarie
– Weekly net income is $571.76 after tax.
– Credit card limit: $2,000.
– No other loansMy goal:
– Is to use the equity in the above properties to raise enough for another Investment property. Approx $250 – $300,000 required. (To be decided, Whether it will be an established home or new development)
– The loan I want to get would be for 100% of the value of the property and to also cover stamp duty and loan setup costs.Tried to raise funds through a broker and we got the following problems:
– Because of the mortgage setup on the yanchep block the banks hold me 100% responsible for paying the mortgage for this block. Eg, when doing their calculations they calculate me paying $770 a month instead of the $385 (don’t ask me why! – it’s something to do with their policies)
– From this – they say they can’t lend me anything (this was through ANZ)On the above information please can you let me know if it’s possible to achieve my goals, and if so the best way to go about it.
Thanks
Wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Wayne
if you are not comfortable with what the first broker detailed, it is your choice to seek the opinion of another professional. for me, i think he/she is close to the mark. you are 100% liable in as guarantor so far as servicing goes.
this is pretty straightforward, in the event your parents/partner doesn’t make repayments and the mortgage is in default, you are liable.
to add insult to injury, you will find that you can only utilise 50% of the rental income for assessment purposes despite being 100% liable.
it also looks like the security properties are blocks of apartments, not knowing the west, but over here 70% lvr is pretty good, and there wouldn’t appear to be too much fat in the system on your figures.
cheers
Brehms
Hi Wayne,
Looks like that vacant block of property (land?) is sucking your borrowing capacity dry. You have no rental income coming from it – perhaps it is time to get a construction loan?? This will be easier then trying to get finance for another home.
As far as I can see the banks will indeed take the FULL repayments on the property, not just your half. They have to take into account that if your parents stop paying, you will have to cover that amount, banks like to think in terms of “worst case scenario”, put that hat on whenever you talk to them and you will have a much clearer understanding of WHY they think that way. Policy policy policy.
If you aimed a little lower, and applied for an IP with a “projected” rental income of $150 (to increase your borrowing capacity, this would need to be proven if you found a property), one of my lenders may lend you up to $160K (I say MAY as I am just going off what you have said here).
What are you doing with the block in Yanchep?
Good luck,
Liz
Liz
Mortgage Lender
Hi Guys,
Thanks for your replies.
Liz, when you refer to construction loan – what do you mean by this exactly?
Yes, that’s what my last broker said about me being 100% liable. I hoping that maybe I can refinance the block on the equity thats been created within the block? My rental wouldn’t be guarantor for the block then, and then with re-financing they’re maybe some way which the banks accept that I’m only 50% liable.
My future plans are to keep the Yanchep block for 2-3 years, then build a new home on it and sell it off as a brand new home and land package.
However, in between now and selling the yanchep block I was hoping to raise enough to buy a rental on a duplex block – then sub divide and build a new home out the back. The funding required for this would be approx 200k to buy the rental, then another 90k or so to build the new home out the back.
The annoying thing is aswell, that for the yanchep block I actually have the loan repayments for three years sat in a term deposit – therefore the yanchep block isn’t affecting my cash flow one bit.
Hoepfully I’ll find a way soon, though I got a little frustrated the other day when my girlfriend spoke to a broker and could get out 180K – when she’s earning less than me and has no equity to her name at all!
O’well – I guess I’ll just take it as a challenge
Thanks for your help guys!
– Wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)
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