Dags, no lender will lend more than the property is worth. In fact most will only lend 80% of what it is worth, or more-up to 95% in certain locations-if you pay lenders mortgage insurance (LMI – this covers the lender if you go bad).

With low docs, you will generally only get 80% LVR or less.

Terryw
Discover Home Loans
North Sydney
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Gavin

I agree with MH. This type of financing is tough. It is not normal commercial and there are only a few financiers willing to lend for petrol station. The LVRs may be around 60%. And they are worried about site contamination etc. valuations (and legals etc) are expensive, like $2000+ and have to be paid upfront and can vary a lot because of lack of comparable sales. And they wold probably only lend on the value of the security not including the business.

It sounds like prety good deal if you could get the vendor to finance the deposit for you. I think in these sorts of deals the vendor would get between 10 and 20% pa. depends on how desparate to sell they are

Terryw
Discover Home Loans
North Sydney
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I htink you can only claim in proportion to your share of ownership. But you may be able to set up a partnership and claim differently further information can be found in the ATO rental properties booklet, which you can get as a PDF file on http://www.ato.gov.au somewhere.

Have you considered using a discretionary trust or a hybrid unit trust for this? Witha Hybrid all the interest could possibly attributed to the highest earner. More info is in Dale Gatherum Goss’s “Trust Magic” book.

Terryw
Discover Home Loans
North Sydney
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Hi New Kid

You’re in a great position at the moment while you are living at home. I would sugget you might look at going for 95% loans earlier on. the reason being, the less money in, the further your savings stretches. Also as you get more properties it becomes harder to qualify to pass teh lenders mortgage insurance guidelines.

Say you are looking around the $100,000 range and assuming 10% rental yield, you should be able to buy around 5 or 6 at 95% LVR-maybe even more -another 6?. You will need to come up with 5% deposit and costs. Some Lenders (ANZ, suncorp) allow you to borrow the LMI on top of the 95% loan as well reducing your upfront cash needed.

How much cash do you have at the moment? after a while you will ahve to increase your deposits from 5% to 10% then to 20% as you ‘hit the wall’ with LMI. If you can keep comming up with 20% deposits, then you can go far. Accessing the growth in the earlier properties will help as well as saving hard. (I did 5 x 95% loans with one bank in less than a year on a similar salary a few years ago)

Terryw
Discover Home Loans
North Sydney
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If you have limited cash, options are a good strategy. Buy a option on a property and find someone to sell the option to, or do a sandwich lease option where you lease a property with an option to purchase and then sublease it at a higher rent with a higher option price. You could do unlimited numbers of these as you wouldn’t need to qualify for finance. You just have to find them!

Terryw
Discover Home Loans
North Sydney
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I wouldn’t touch a serviced apartment. Hard to get finance, hard to onsell, low capital growth and relatively low rental yields.

Terryw
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North Sydney
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Hi Chris

Thsi happens to most people sooner or later. Some banks are more lenient than others (Westpac is pretty good). Not all use the same figures when calculating. eg some add margins on the interest rates (a buffer), others assume PI loans, others assume higher monthly expenses etc. So shopping around helps.

Some people also get around this by using low docs or no docs. Do you have much of a deposit?

Terryw
Discover Home Loans
North Sydney
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There are companies that will lend to people that haven’t got their finance approved, but their applciations and assessment proceedures are just as strenuous.

Most banks issue them now. one company that I know of is deposit Power
http://www.depositpower.com.au/

Terryw
Discover Home Loans
North Sydney
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Fullout

It is pretty hard to get a loan for a business as really there is no security.however, some banks will lend for big franchise purchases such as McDonalds. Unless you have property you can use as security it will probably be very hard and/or hihg rates?

Terryw
Discover Home Loans
North Sydney
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I would do a lot mroe research before you consider buying a franchise. What does it cost? I have heard of ones going for $20,000 and then they only give you 80% of the commission you make.

Why not go work for a mortgage broking company for a while, and then just go out on your own. Save yourself $20,000.

As for income, I have heard of people doing $4 mil a month in loans. Thats a lot of commission!

Terryw
Discover Home Loans
North Sydney
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