Hi reno

Be suprised to hear what some clients call there Company and wonder why they cant get finance.

You are going to be fairly limited on your husbands income alone so real carefull loan planning will be required.
On his income you would be looking at a maximum (assuming all credit card liabilities were gone and he did not guarantee the loan on your principal place) borrowing of around $250K.

As i say structure with a lodoc loan and line of credit buffer.

Ok assuming the Bank value the property at $340K you should be fine.

Just make sure your mortgage broker or banker splits the loans after the capital reduction.

Still going Mike!!!.

Oh ye of little faith.

Adding to Terrys well made points:

1) Do not call your Trust or Company something along the lines of "Smith Developments or Smith Renovations" as lenders just love lending to clients who they thing are doing this full time at residential rates instead of development rates and the associated fees that go with it.

2) Have you thought about how you would go financing these deals once you give up work ?
Not as easy as it sounds unless you have 2 years Tax returns and track record.

Taking out a line of credit on your home at the sort of level you would need will send warning bells to any lender who will want to know what the funds are to be used for and why. Some lenders may want to direct the flow of funds.

Your mortgage broker should be aware of the intracasies of this sort of funding as otherwise you could easily come unstuck very quickly and this could end up costing you a lot more in the long run.

Hi Mark

Welcome to the forum and I hope you enjoy time with us.

Some answer to your questions:

1. Am I in a strong position to buy an investment property?
A) Certainly you appear to be able to service the potential debt. What is the current value of your property?

2. Is it possible to find a property so the rental yield will cover the new mortgage? I'm thinking of buying something for $150,000 and renting it for $150p/wk in regional Victoria.
A)Buying a property for $150,000 and receiving $150 week rent gross will not quiet self service but you wont be too far away. Depending on the post code and locality of the property may have a bearing on the maximum lvr.

3. Will my current home offer some assistance when applying for a new loan?
A) This all depends on the current value of the property.

4. What type of loan should I look for?
A) An interest only loan would normally be suggested especially where you have other non deductible debt.
How you structure the loan will be parramount to maximise the Tax deductible interest yet still keep the loan separate to your current home.

Ideally you would want to pay down your current PPOR loan by $40K and then arrange a $40,000 sub account to you can utilise these funds for the new deposit etc and the interest on both this loan and the new investment loan will be tax deductible.

Your mortgage broker should be able to give you some options.

Hi Wenever

Terry has given an excellent explanation of how to structure your loans going forward.

Is the Child Care centre cross collateralised with your own PPOR if so accessing equity could be difficult as lenders have become very scared on CCC security after the ABC collapse.

Ideally you might look to restructure the Commecial loan to free up your PPOR equity and this may take a bit of digging from your Broker as to where to find the best home for such an Asset class.

Other than that there are a few other lending options when it comes to moving forward.

HI Blissy

Sorry to come into the end of the post but can i ask you why you are paying principal & interest and reducing the debt balance ?

The loan is interest only for a reason and if not should have a 100% offset account linked to it.

Place all of your funds into this and offset the interest rather than reduce the principal.

You can use the offset monies as deposit to buy your PPOR or another IP if needs be.
Make sure you keep the loans separate and do not cross collateralise the 2 securiries.

Crunching some quick numbers i cant see serviceability being an issue more like the loan to value ratio as 90-95% lvr will be the maximum.

Your  FHOG will help defray some of the costs but most lenders are going to want to see minimum 10% savings as Stamp Duty and LMI will add up. 

As long as you can come up with the required amounts no reason to wait if you find the right property.

Hi Brian

Firstly welcome to the forum and I hope you enjoy your time with us.

As SNM as said the crux of the matter away from returns and yields is that lenders are very conservative as to what lvr they will loan for a Commercial property compared to a Residential one and in addition the rate of interest they will charge.

Presently there is around a clear 2% + gap between residential and commercial rates so i guess from the lenders perspective you can tell where there preference is.

Certainly starting out on your investment journey i would be looking at Residential so reduce your risk and exposure.

You might want to think about how you structure any new loan trying to use as little of the equity in your property as possible.
Certainly avoid cross collateralising the securities as Banks love this and will encourage you to do it.

Either way good luck in your journey and keep us all posted.

Hi Kim

Good to hear that the word is getting through lol.

Also make sure the LMI component is on the IP loan it then becomes deductible.

No just ask your Solicitor he will tell you that consent is not required unless of course the 2nd mortgagee is insisting on it.