Hi,
I am looking at getting back into property investing after a failed business forced me to sell my home and left me with about $35k debt about 3 years ago. I decided to put that adventure behind me and went and got a real job. I was wondering if anyone could provide some strategies for getting back into property and where / when to start. I've listed my current financial position below.
I've had a secure job for 12 months now earning roughly $80k p/a, this will rise to about $110k p/a from next May. I never defaulted on any loans and have an ok credit history
My partner earns roughly $40k however she has a poor credit history
I still owe $17,000 which relates to the business but I was able to transfer it to personal credit cards as interest free until 6/13
I have about $10,000 saved which was originally intended for paying off the credit cards, but as they're interest free, it's been left in a high interest savings account
We pay around $1,300 per month rent
As a saving guide, we are able to live of my partners salary and save just about everything I earn
Should we be looking to buy a place to live in or is investing while continuing to rent a better option?
Am i better of saving a sizable deposit or look at jumping in as soon as someone will give me a loan?
If investing are new properties a better idea?
Thanks in advance for any help
Hi Wally,
Whichever way you go (IP of PPOR) you will need to get a deposit behind you. The days of no/very low deposit home loans are a distant past at the moment.
Typically you'll need approximately 10% of purchase price – this allows 5% for purchasing costs and 5% for deposit. The lending market constantly changes so a broker will be able to firm up those estimations for you.
Generally speaking 'new' properties re not an ideal place to restart your life. They do attract a price premium and are often sold for investment purposes on the tax benefits associated with new properties. Given you are restarting you may be better off looking for something that you can value add to – renovate, sub-divide, develop etc.
Hi Wally,
In relation to finance, if you need your partners salary for servicing a loan, then depending on how "poor" your partners credit history is, you might not be able to finance with a regular lender and might have to go down the specialist route.
Also with a high personal debt such as the $17,000 credit card, I would suggest at least a 10% deposit, as LMI don't particuarly like high debts at 95% LVR.
Cheers
Tom
Hi Wally
First thing I'd do is grab a copy of both your credit files to make sure there's no defaults that are going to cause an issue.
Like Tom said, if your wifes credit history is in bad shape then you'll need to demonstrate that you can service the loan on your income alone and keep your wife off the application.
You'll have a much better chance getting a 90% deal approved over a 95% deal every day of the week so if you can save the 10% deposit and costs that would be ideal.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
First thing to do is get a copy of your credit file. It is likely you will have bad credit as well as your wife (by the sound of things). If so you will need to wait and/or get a much larger deposit.
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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