Hi, My prop.(Unit) purchased 3yrs ago costed $290K with P/I Loan, current o/s debt for this Prop. is $187K with re-draw $67K. Two months ago, exactly the same layout of Unit sold for $410K in the same street which is 1 yrs older than mine. Also, bought an Investment House May03 with I/O Loan for $205K (included Pur. Cost + $194 Pur.Price), recently very similar house on sale on the same street for $265K. Both property are under 2 people’s name, and the total annual income before tax is $97K or total after tax income $62K.
Now, looking for finance, and not sure how much can borrow. At one time, CBA told me verbally that can borrow maximum $350K. Lately, found a house which cost $500K, I wonder should I sell the Unit first, then buy the house? or should I buy it as I/O for investment & rent it out, and lodge a PAYG withholding adjustment form with ATO, in order to increase the cashflow for loan repayment? or should I move into the house as owner occupuncy, and revalue the Unit at market value then rent it out as investment property?
Please through in your idea. [?]
Thank you!!Hi TIG
Before you go making any decisions about selling etc., I would make a serious effort to find out what your borrowing power is. To this end, I would contact one of the many brokers on this site – they will let you know fairly quickly where you stand, and as they all invest themselves, they could probably give you their opinion on the best way for you to move forward.
Cheers
MelThank you, Mel [
]Mel is right.
There may well be another lender who will lend you far more than the CBA.
Contact an independent broker for a quick run through all your options.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi,
One question – was the CBA max amount including any additional rental income to service the new debt, and if so how much?
Being a broker and knowing how many options there are to structure finances in cases like yours I cannot stress how important I think it would be for you to see both your accountant and your mortgage broker before anything else to make sure you have the best long-term set up possible.
Happy investing!
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Mel
[email protected]Mel and Simon, Thank you for your advise.
CBA does include the protential rental income in her calculation, but didn’t let me know how much was it.Hi,
CBA only use 70% of rental income towards your servicing model, whereas many other lenders like Macquarie will take 80% of the rental income they have security over PLUS 100% of any other rental income you have from other IP’s and are often better for investors. Having said that CBA are quite generous in the portion of the net pay which they will assume is available to service debt so this is possibly not far off your current limit. ING would be another bank I would try, but get a broker to do this running around for you.
A broker will help to estimate the costs of all your scenarios mentioned above and give you an idea which of them are within your current affordability and which aren’t from a lender’s perspective. Armed with this info an accountant is also a vital link in this chain.
If you do need to sell before you buy, get your property listed asap while doing this other research because you don’t want to caught out seeking expensive short term finance if it can be avoided.
Good luck with it all – you have lots of good options to consider.
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Mel
[email protected]
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