I am still new to investing and find that I am unable to understand how you can buy a lot of properties.
For instance I own PPOR value 380 and IP value 380. In equity I believe this means that I could borrow 608000 but my income only allows 530000. I currently owe 320000 so that leaves 210000 to buy more property.
Now if you buy something at 200000 and it returned positive, rent would be about 400 pw.
That gives an income of 20800 which they will only count 70% of 14560.
Now you still have spare equity but your income has only gone up by 14560 which gives borrowing power of around 75000.
So if I understand correctly you can now only buy a cheap place and once that is done, next place will half again etc. Unless you can keep paying off a lot, how do you get any further?Sorry if this is a bit confused, most probably due to state of my brain trying to get round this
Misty
It is a bit confusing, but basically you can borrow up to 80% of your property value. So if your prpoerty was worth $600,000 you could get $480,000 less any current loans. But you stiff have to be able to service these loans. They only way to buy many is for them to be cashflow positive and/or you having a very high income.
Some people use low doc loans and exaggerate their income to qualify, but you still have to be able to actually fork out the repayments each month.
You may also face problems of deposits. If your portfolio is not growing very fast, then it will be harder to come up with the deposit, you will have to save from other income.
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
Perhaps look at the possibility of joint ventures.
Hi misty,
The maximum percentage of gross rental income credit providers take into account when assessing serviceability for finance will vary between lending institutions from approx. 70% to 100%.When calculating serviceability, ensure your Mortgage Broker or Credit provider itemize the interest component on all current investment loans as this will increase your borrowing capacity.
Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
Ph:1800 820 500
VICTORIAPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Thanks Steven
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