Hi,
Can anybody tell me what the banks mean by rent reliant?
Thanks Dom[
]Hi Dom. I presume that you are trying to arrange finance for a rental property without having a “Job”. Sorry if I’m wrong. But I would imagine that they are unwilling to lend if you don’t have a job, as you would be reliant on the rent (rent reliant)…..and if you had no tenant for a period of time, how would you pay them???
That’s all I think it could be.
Cheers
Ca$hking[]Hi Dom/Cashking
It’s not just the lack of a job. It’s the fact that a LOT of your income to service your debts is rent.
We are in that position also. Some of the brokers on here may be able to give you some tips, or different banks even to get around your banks opinion.
Cheers
Melcomdom, check out this month’s issue of Australian Property Investor (API). It has a case study in there of a couple who are entirely “rent dependent” and the banks won’t lend them money. I think they are even struggling to get no doc loans now. They have something like $4m in property value and owe $2.5m.
Their situation made me decide i had better keep my job if I want to keep loan eligibility
)Serviceability of a loan is one of the things a bank assesses before deciding to offer you a loan. Serviceability assesses your income and rent is only a parft of that. Most banks will want you to have a job with a decent income too.
There are a squillion low doc home providers on here. Check out some of the other posts to find them
) A mortgage broker can probably find you a loan for free- there’s heaps of them on here too.kay
Hi Guy,s
Just a thought.
There is also another interesting article in the latest API issue, titled Unlimited Finance, page 28. You might find this of interest.Hey Porsche
The author of that article – Stuart – posts on here quite often.
Cheers
MelBanks often use the old ‘too rent reliant’ line. The trouble is, it is hard to define when you actually reach this level. Different lenders have different polices, and they don’t really make these policies known.
It basically means the proportion of you income comming from rent is too high compared to other income. The lenders may deem you to be too sensitive to the property market, so any sligh rise in interest rates could get you in trouble. Having positive cashflow property may help to a certain degree, but they can (and do) say you are too rent reliant if all your properties are cashflow +ve.
There are ways around it, such as using several banks, low doc loans, bigger deposits (lower LVRs) etc. But most people will run into this problem sooner or later.
I suggest you have a look at Stuarts article from API magazine for some ideas on finance. It is available from his website if you don’t subscribe.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Thanks everyone for the information this rent reliant Quote was given to me by the morgage broker i have been using to purchase IP. I do have a job i work for Arnnot’s Buiscuits and have 3Ip’s and have found a 4Th but thinking i may go to an other bank.This has been a dilema for me for a few weeks to move forward because other banks tell me i have to move one of my loans with them to borrow for an Ip.Which i prefer not to so i can have it as a stand alone.I probably have (guessing) $230000 In equity and $620000 In loans all positive geared.
Again thanks evryone for your information makes it a little clearer.
Dom[]Hi Dom
Banks always want to steal business from other banks! It makes their eyes light up.
You could still take one of the other properties across, and keep it as a stand alone. Just find out what deal they are offering, and see if it’s better than what you have currently, and whether or not your current bank will match it.
You could always tell the new bank that you will be purchasing more property and they will be able to offer you a loan on that one too.
Cheers
MelHi Terry,
Any idea of the website address for the article you mentioned by Stuart?
Cheers,
David [8D]
Sorry, I am only guessing but think it is
http://www.prosolutions.com.auTerryw
Discover Home Loans
North Sydney
[email protected]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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