Hi all,
Perhaps a daft question, but do any lenders lend soley based in the rental income of the property in question?
ie. loan of 80k with the rental being cash flow positive and covering the repayements.
Cheers
Banks will still look at other financial obligations that you have, as even if the property is cash flow positive you still need to be able to afford living expenses and other repayments. So the bank will look at the whole picture not just a section of it.
Even though you have your property being CF+, is that during a period of 100% occupancy? Banks will only accept 80% of rental income. So if your total rental income is $200/week the bank will see you having an income of $160/week. Banks also consider your ability to make repayments incase of interest rises. If you are CF+ positve on a loan @ 9%, the bank will normally asses you about 1.5% above the current rate. So even though you may show CF+ at current rates the bank may show that you can't afford repayments at the rate they calculate
thanks for your response gibbo1.
I was looking buying a couple of cash flow + IPs for my wife, I'd give her the deposit etc. I just don't want to be on the title.
Maybe I should look at a trust.Certainly if the properties are neutral or posively geared i would considering a Discretionary Trust.
Many lenders offer lodoc or nodoc style loans depending on the zoing and post code and require evidence of income at all.
Richard Taylor | Australia's leading private lender
Hi Richard,
I'm sure youve stated this before, but whats the cost in setting up a discrentionary trust?
Cheers
Pwinne
All depends on whether you have personal or corporate Trustees but around $775.
If you want a Company sitting over the top then probably need to double this.
In saying this i have heard of advisers charging $3000 to do the same thing.
Richard Taylor | Australia's leading private lender
no i have not heard about any lenders lend solely based in the rental income of the property . but you can find more information at
Mate this is an Australian site with Australian readers.
Please take you Texas spruiking elsewhere.
Richard Taylor | Australia's leading private lender
pwinne wrote:Hi all,Perhaps a daft question, but do any lenders lend soley based in the rental income of the property in question?
ie. loan of 80k with the rental being cash flow positive and covering the repayements.
Cheers
They are getting rare, but a No Doc loan is one where no income is taken into account at all. This would work
other type of loans would generally assess you by taking a percentage of your income and then deducting estimated expenses, including living expense. So if you just had one property rental income to take into account you probably wouldn't pass because of the living costs. If you had several, all positively geared, it would be possible – but then some banks may say you are too rental reliant!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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