Forum Replies Created
Yes more and more lenders are tightening the noose.
Be surprised how difficult it is to roll over to an interest only loan once your current IO Term expires these days.
APRA is looking at further tightening this and many other areas of servicing when the introduce their new measures in the May report.
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Yours in Finance
Richard Taylor | Australia's leading private lender
What LVR ?
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Yours in Finance
Richard Taylor | Australia's leading private lender
Sorry Robbie that is not correct lenders certainly consider rental income when assessing your serviceability for future loans.
Many lenders merely take 80% of the Gross rental income and then deduct your usual expenses (assume you don’t have any loans against the properties) and your living expenses.
I built a $30 M unencumbered property on rental income alone.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Don’t get caught refinancing for refinancing sake.
Look to go back to your current lender and do an equity loan.
If the lvr was initially > 80% then you will only end up paying LMI on the increased loan amount.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi San
400K budget won’t get you much in Brisbane but there a few areas which might still be worth considering.
As to whether the property will be positively geared all depends on your loan to valuation.
At a 100% there is no chance but at 80% certainly possible.
Course as you might be aware lenders starting to increase margins on investment loans so each week the chance of the property being positively geared is getting less and less.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Investor in Brisbane with a decent portfolio.
What are you seeking.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Yes it is possible as the loan will be in the name of the new business.
Will be done as a Nodoc loan (No income evidence required) by way of 1RM against the security property.
Rate will be circa 7.00 -7.75% Per annum.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Shehan
There are a number of investment strategies you can follow to increase your net wealth but where you start will depend on your own investment goals and amount of time you wish to dedicate to your investing.
Whatever you do the main thing is to ensure your structure is sound and you have flexibility when it comes to financing.
The biggest problem with most investor clients is they do not set up their finances correctly from day 1 and then find themselves unable to move forward in a strategic manner.
Poor advice from Bankers or brokers seems all to prominent in an industry where professionalism is oh so lacking.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Newbie
It is crazy to sit back and wait for the in-house finance guys too come back to you when you have settlement dates pending.
Another major lender pulled out of the investment refinance market yesterday to go with other lenders who had already adopted this tightening in credit policy.
Do not wait. Get your father to act now and get a second opinion.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Sing
I have read that taking a loan out in the name of a family trust maximises serviceability, as I don’ take on additional debt in my own name.
Regretfully this is incorrect. Guarantees are taken into consideration when calculating servicing.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Sing
Couple of quick answers to your questions raised.
When taking out the loan against our first IP (which is in my name), must this loan be in my name, or can the Family Trust take out the loan and let me authorise the use the equity of our IP as a guarantee?
The loan would in the name of the Trustee for the Family Trust with you as Guarantor.
Although my profession allows me to loan up to 90% LVR without LMI, does this apply when the family trust takes out the loan with myself as the guarantor?
Depends on the lender but YES with the ones i have done.
How does the bank decide how much can be loaned to the Family Trust, since the trust does not provide any income? Would it be based on my serviceability (acting as the guarantor)?
Yes your personal income would be taken into consideration together with your personal expenses and any rental income / loans etc the Trust currently has.
When refinancing the mortgage on the 1st IP, would it also be possible to convert it to an interest only loan at the same time? That way I can enhance my tax claims against my income (since it would make the property negatively geared whilst still being held in my name).
Will depend on who the lender is.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Sounds like a fairly straight forward deal given the income is declared net profit.
Remember GST has nothing to do with earnings but more to do with turnover.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Firstly lenders normally only consider dividend income where there is consistency over 2 Tax Returns.
Assuming all good most would add banking the franking credits and recalculate your tax payable dependent on your Tax rate.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Loui
Believe it or not a few lenders already do not factor in negative gearing to their servicing calculations.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Elena
You can’t go past lisa at parker invest. http://parkerinvest.com.au
Referred a couple of forum clients to her recently and they are very satisfied with what she came up with.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Elena
Which part. There are a few we refer to depending on the location you are after.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Loui
With the odd exception all main stream lenders have already adopted the new servicing requirements applying a minimum benchmark rate.
I am only aware of 1 banking lender that hasn’t changed its policy yet.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Loui
Don’t blame your Bank as they are directed by APRA and that is just one of many changes coming in over the next 6 months.
In saying that NO not ever lender still services external debts applying a sensitized rate.
Certainly getting harder to grow your portfolio but done properly can still be achieved.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Hi EH
No hate to say you are certainly dreaming.
Every lender is going to want to analyse your financial position to ensure their debt can be repaid.
They are going to want to see you can service the loan thru income whether that be traditional payslips, Tax returns, BAS or Accountants Certificate.
Even with a non coded loan a private lender / financier will not go that level without ANY form of income evidence.
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Yours in Finance
Richard Taylor | Australia's leading private lender
Also Australian tax law is probably significantly different to the scenario in the USA.
OK all noted just the above comment thru me out.
Certainly subject to the numbers you could look at the highest income earner buying the other parties share of the property out and borrowing to fund this making the interest deductible.
Course consideration needs to be given to both tax and legal aspects.
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Yours in Finance
Richard Taylor | Australia's leading private lender
