Forum Replies Created
- Originally posted by JustAllan:
My wife & I are really struggling with a decision. That is, if to buy our first PPOR or an investment property.
This one is totally up to you.
If we found a neutral-geared IP (its incoming rent would cover the IP loan repayments), will we be able to get a second loan?You would if you had the income to service the additional loan. Most lenders will not allow use of the total rent and will use only around 75% of it towards servicing. This allows for vacancy and other expenses like property management, rates, etc.
Also, someone I know has just completed a mortgage broker course. They told us once we have the PPoR loan, we could instantly “access our equity” – or, up to 80% of our PPoR as a deposit for an IP property. Even though we still owe 80% of its value to the bank!?Tell him/her to go back and do the course again. You can actually borrow much more than 80% initially but refinancing will only allow you to go to 95% but it will cost you a lot in mortgage insurance. Your commonsense has told you that you can’t borrow what you already have borrowed and used.
Our other plan of action, of course – would be to buy an IP first. One that is cashflow neutral or slightly positive. Because we can now document to a lender that the IP is paying for itself… and so our expenses have not increased (we still have the same income we had before the IP loan), we should be able to easily borrow again, yes?I answered this above. You want more than slightly positive if you don’t want your serviceability position to change because they will only use a part of it.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdThere is always something. How about gym memberships or new push-bikes?
Some of the people on this website have done some amazing things to increase rent.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdSearch for Caravan Parks. We recently discussed this. I would not touch them.
Try this link…
https://www.propertyinvesting.com/forum/topic/14502/1.html?sortfield=&sortorder=&SearchTerms=caravanRobert Bou-Hamdan
Mortgage Adviser0414 347 771
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI have been told it is a matter of approaching the tenants and asking what they want. An example is:
If I install air-conditioning, would you pay an extra $10 per week rent?
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI see your dilemna. It is happening a lot in the current market. I guess patience is the answer.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI am not into mucking around anymore. It is all a means to an end….. THE BOAT!!!
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdPaul,
Wrapping is totally different to what lenders do. With lenders, title passes to the borrower and they hold a mortgage. With wraps, title does not pass and the wrappee can lodge a caveat which can not be done by an owner (because they own the property).
Lenders sell without regard for loss to minimise potential further losses and as they will still chase the borrower to recover shortfalls. If mortgage insurance is used, they incur no loss but the mortgage insurer does and they will chase.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdDo you not have any equity available for the deposits? You did say your properties have increased in capital value…
Using existing equity is common for further investment properties.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdMark Unwin is the guy I will be using from next year. He is also Steve and Dave’s accountant.
Email him at [email protected]
He is in Melbourne.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI am familiar with SIG
<edited>
I will see what pans out through this forum.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdOriginally posted by JustAllan:Um… It’s not that big a hurdle. For instance, if he’s in NSW the government has what they call the “Government Guaranteed Loan Scheme”. As it sounds, it virtually guarantees loans to low income earners who are in, or qualify for, public housing.
Start at http://www.nsw.gov.au and follow the housing links – it’s pretty easy to find. Basic info is… It’s through the Commonwealth Bank at their standard variable rate, but is farmed out through only one mortgage broker in the particular area the buyer is located.
I would be interested in more information on this as I have not come across such a loan. I understood Government Assistance for home loans only came in the form of interest free loan repayment assistance paid directly to an existing lender.
I’m on a disability pension and getting a loan sure doesn’t seem to going to be a big problem for us. Wouldn’t unemployment benefits be the same, considering the NSW government is giving out loans through a scheme designed just for such folks?I would like to know how you find it so easy to obtain loans while on a disability pension. Where do you get all these loans and for what amounts are they? How many have you got? Remember, a no doc loan or low doc loan requires larger deposits so you would probably need to already have a property. None of the mortgage insured loans will say yes to someone on a pension.
It would have to be positive cashflow or they could not make repayments. Unemployed means NO INCOME. There is no choice.Or neutral – or slightly negative. And of course, it all depends on how well they budget. I know people with $60-80K jobs who pay the minimum on their mortgage and have nothing left at the end of the week. We can save two thirds of our Centrelink payment – and that’s while paying rent.When a lender checks serviceability, they use a margin above the actual interest rate to account for increases. Neutral or slightly negative will not be acceptable and how will repayments be made if rates go up substantially?
I can’t see how you save so much? It seems your earlier comment about a mortgage refers to getting one in the future and not mortgages you already have. I guess you have no incentive to go back to work if you are able to save so much. You will find out how hard it is when you go for your loan.
Most will say to keep saving – but as you’ve seen (and instinctively know) – while you’re saving and paying rent, everyone else in the property market slowly leaves you behind at a rate of increase of 5%-10% annually.More or less depending on the area.
What these people forget is, you are paying rent. And the upper limit a lender will give you will means you’ll have to purchase a cheaper-end property anyway. Furthermore, you have no job restricting you to staying in a high-rent area. What I’m getting at here is – the type of property you/we can afford to buy – after thrusting ~ $27K into a deposit – the repayments will be VERY close to the rent you are already paying – and if you move from say Sydney a couple of hours inland – the repayments would actually be LESS than your current rent.This does not allow for minimal living allowances the lenders are obliged to use when calculating whether someone can sevice a loan. These miminum living allowances are higher than any pension or dole payments I have seen.
Of course, depending on where you are, it may mean you have to move for six months – for two reasons:1. To get the $7,000 First Home Owners Grant.
2. To live in the house for six months in the first twelve, to qualify for the grant.Actually, you get the grant whether it is tenanted or not as long as you intend to move in within the year. You just have to move in to the property by the 365th day after settlement and stay in it for 6 months.
If it’s your first home, you are exempt (in NSW at least – maybe other States too) from stamp duty, etc.There are limits to this which would not affect small loans like these though.
And $27K is 20% of… $135,000. The reason it is important for someone on government benefits to keep their deposit at 20% is twofold:1. With a 20% deposit, you can avoid paying mortgage insurance – which protects ONLY the lender – not you. It’s designed to protect them if you lose your job and can’t make the repayments. But since you already don’t have one… And… You’d have to pay their insurance company back anyway, if the lender every claimed on the insurance – this means you’d be paying for it TWICE!
Mortgage insurance has nothing to do with repayments. Mortgage insurance is designed to cover any shortfall to the lender after they take possession of your home and sell it. The shortfall is paid by the mortgage insurer and then they come after the borrower to recover their losses. That is why the more you borrow against a property’s value, the higher the premium. It is a ‘risk premium’. Higher borrowing = higher risk.
NOTE #1: Someone unemployed wouldn’t qualify for a loan of $135,000 anyway. You’d have to check, but it’s probably more in the vicinity of $70,000 + your saved deposit + the $7,000 FHOG.It would be pretty much $0 unless you lie on the application form or already have property.
NOTE #2: Sometimes lenders will only accept half the $7,000 FHOG as part-deposit. But there’s nothing stopping you paying the other $3,500 off on day #1 of the loan.Actually, the lender will never refuse any of the FHOG as part of a deposit because the more that is paid, the less risk they incur. I think you may be referring to them using the FHOG as genuine savings. Most lenders don’t consider it all because it isn’t savings.
So the main idea is, as someone who is unemployed, you don’t want mortgage insurance. Buy a $80,000 property, whack $20,000 deposit down on it, shove the $7,000 FHOG into it as well as soon as you get it, then count what you’re saving in rent… Say $6,000 – and you must’ve had money left over to save $20K in the first place… It all adds up to a huge amount of equity being payed it off in comparision to the original loan amount – thus creating a +ve cashflow property (once you move out and rent it to tenants).The $7,000 will be available at settlement if applied for prior to settlement and it is not as easy as you make it sound. You have to find a tenant first and maybe the saved money occurred when the person had a job. An adverse interest rate move would quickly see bankruptcy proceedings which adversely affect you for 7 years.
If you’re going to rent it out immediately instead, and it’s cashflow neutral – well, you got the first loan and now have an investment property that is paying for itself. So I don’t see why you couldn’t now get ANOTHER loan where the rent covers the repayments.You wouldn’t get another loan because you would not have any deposit, not all the rental income would be used by most lenders and they use higher rates for checking serviceability amongst many other factors.
So to directly answer your question – either way I’d pick a cheap property – and aim for cashflow positive or even neutral – since someone on Centrelink benefits won’t qualify for the loan amount required for a Capital Gain property anyway.If you aim for neutral, you will find yourself in trouble. Also, any property can result in capital gains depending on what you do. My suggestion is to get a job or find an alternative source of income that you can declare. That way, if things go wrong, you have some back up.
Think of one thing, what if you can’t find a tenant and you don’t have a job or other income?
A final thought: Talk to your mortgage adviser or a professional before committing yourself to the slaughter!
A wrap or lease option might suit you better.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdCome on Lucifer, the story was in the paper so it must be true and accurate!!!
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
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© 2004 Mortgage Packaging Pty LtdFirstly, the horses name is Friday.
Regarding your equity, you will not be able to refinance up to the value of your property. You can go up as high as 95% but mortgage insurance will cost you around 3.5% of the loan amount. If you work with about 90% of the property value, that is how much equity you can use after your current loan is taken away.
Most borrowers will keep their borrowings under 80% of property value so they don’t waste thousands of dollars on mortgage insurance. This decision will come down to what value the new purchase will be. You will do your figures asking yourself – Is it worth paying mortgage insurance or not???
I hope this answers your question.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdIf you can afford that one, you can afford a residential property worth a lot more if you borrow. The problem with land zonings is that may never change.
I bought a parcel of land when I was 18 in Erowal Bay – Jervis Bay (I am 33 now) and a few months later the land was zoned as National Park after Greenpeace got in to protect some crappy flowers that grow like weeds and no-one knows about. Mind you, the area was already cleared of trees and roads etc were put in.
We can put a fence around the block and put a tent or caravan on the land but cannot build. We still have to pay rates each year because the valuer-general values the land. Go figure!!!
The valuer-eneral values the property at $8,000 in it’s current state. If zoned residential, this lot will be instantly worth between 600-700k. I can’t see this happening any time soon but it is nice to dream.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI might have to move to Melbourne. It seems they have the best support teams. I already chose Mark Unwin as my Accountant who is down there. I am not certain if using a Vic solicitor would be a benefit as the laws differ State to State so much!
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI never look at the prices. If I can’t afford it, I do not go out to eat in the first place.
Tim, regarding my “WHY”, it is so I can be my own boss and create not only a business which I consider ‘MY BABY’, but to establish an entity that will help a lot of people and command respect from those within the industry and the public at large.
I will be working my butt off for at least 2 more years according to my plan (and various set-backs along the way) but the final “WHY” is to be able to live and operate (not because I have to but because I want something to do) from a large sailing catamaran where, if I wake up in the morning and get sick of the view, I can raise the anchor and move somewhere else even more beautiful!
My lifestyle target has not eventuated yet but I believe I will be in that position in two more years. I will let you know when I buy the boat I dream of.
Merry Christmas
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdMerry Christmas Felicity…
What if the property does not sell for a suitable price?
For example…
What if the wrappee spent 10-20k on the property and the market dipped and they would not receive anything according to the market valuation?
Technically the caveat could remain as they spent 10-20k on the property and would be entitled to this amount at the very least if there is no added equity.
Also, do you require submissions to be made to you for all renovations for approval?
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdThat menu analogy makes no sense to me. Doesn’t everyone read from left to right (except Arabs and some Asian cultures)?
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdThe money is in Environmental Law (Corporate) as far as I am concerned. Make the money there and invest it in property and whatever else tickles your fancy.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
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Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdBoth of these but mostly because of a flooded investor market.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
