Can-we-borrow-to invest?

Viewing 6 posts - 1 through 6 (of 6 total)

uplands
Member
@uplands
Join Date: 2004
Post Count: 2
November 11, 2004 - 12:28 am
Hi I’m a new member, just read steve’s first book.Would like to know how to borrow for first investment property for positive cash flow.
Farm currently valued $500,000
Mortgage 65,000
Car loan 5,000
No other debts
Income: Husband on disability pension
Me : self employed organic market garden, sole trader (cash income)2004 4,000
Will they lend on the idea that the rent will pay the motgage repayments as I dont show much income
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
November 11, 2004 - 1:11 am
I think the only way you would be able to get a loan is by using a NODOC loan. You need a 35% deposit for one of these. Can you pull a large enough deposit from your farm loan?
Perhaps you need to reconsider whether this is the right track – $4000 plus a disability pension is a very small household income and must make it hard to even meet the farm repayment. A bad season might see you regret the IP purchase.
All the best for the future,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985
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Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
uplands
Member
@uplands
Join Date: 2004
Post Count: 2
November 11, 2004 - 4:11 am
Thanks for reply Simon, What is a NODOC loan? Our original mortgage was for 95,000 so I presume we could redraw on this. If we could get the 35,000 deposit would the proposed rent be enough to secure a loan( proposed loan around 150,000) We have available credit card limit of 9,000
crj
Participant
@crj
Join Date: 2004
Post Count: 618
November 13, 2004 - 3:56 am
Can you look at increasing your income from the farm eg if you’re close to a town is there demand from people for room for their horses which might mean you need a few small paddocks with water and shelter
Jenny Lamberton
Member
@jenny-lamberton
Join Date: 2003
Post Count: 11
November 15, 2004 - 11:26 am
With the income level you mentioned, it would be wise to allow a lump sum tucked away for emergencies, such as loss of rent between tenants, and unexpected problems like a blown hot water cyclinder, wiring problems, wear and tear. This makes these problems much easier to cope with.[biggrin]
Jenny Lamberton
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
November 16, 2004 - 4:22 am
I agree with Simon, it may be possible to borrow, but it appears you may be overstretching yourself.
To borrow against a farm using a no doc loan would mean high interest rates and very low LVR. So this will eat into your return as well.
Terryw
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