Have a purchase possibility of a property for future development. Issue is currently I don’t have the 20% deposit.
I have another IP being completed approx Q2 2005, which I have reserved some of my funds for the deposit. Other LOC’s etc are pretty much utilised so my options are limited
Consequently, I am looking at potentially getting a personal loan for part of the deposit. How do banks/financial institutions you are going to for the personal loan view this? Is their something more creative you need to do?
James
You will find most lenders will not do personal loans for deposits on property. Is there a reason you have to put 20% down? Are you self employed and can only obtain a 80% loan for the balance?
Many lenders will accept a personal loan as deposit. You just have be able to service both loans.
Terryw
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Personal loans are easy to get if the servicing is there – ie: your ability to repay all your debt. Your costs will certainly be higher when you calculate your overall interest rate on the investment.
Other options do exist that are much cheaper than a personal loan.
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auComments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
You have to be able to obtain a personal loan in the first place and I know for a fact that most personal loan lenders will not accept the purpose of the loan being for a deposit on a property.
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Owner occupied 4.49%
Investment 8.24%Have previously spoken to Westpac on the issue of further borrowing ability with minimal deposit and the amount they had indicated was approximately $300k(max) purchase price with a 95% P&I loan (IP)
Given the price is in the vicinity of $350k, this would make things impossible. Admittedly this is only Westpac, so I have not verified elsewhere. The rationale behind the personal loan, was that would allow me to place a deposit of a maginitude on the property to qualify for that finance.
Of course, I am not sure when banks do a credit check, look at the specifics of previous hits on your CRA, or whether they just look for defaults etc. So, in this case, they might see a hit for credit for ‘x’ amount (being the personal loan)and then ask questions accordingly(?) Of course, that is if I have not disclosed the personal loan in my statement of assets and liabilities.
James
Hi Georgisj,
Servicing (how much you can borrow) varies greatly from lender to lender. You might find you can borrow what you need if you go to the lender who has the best servicing. Some lenders will use 100% of expected or existing rental income instead of 70-80% on top of your income from work which helps a lot.
There is no need to place a deposit of magnitude these days as the interest rate will be the same up to 97% LVR (How much you borrow against the property value). The difference is the mortgage insurance payable when you borrow more than 80% LVR.
To avoid this, a large deposit will be needed. You have to consider that getting an unsecured personal loan for a deposit will be at a much higher interest rate and it may be cheaper to just pay the mortgage insurance. In many cases, the mortgage insurance can be capitalised (added to the loan amount) without being considered in servicing the loan. When capitalised, the cost can be spread over 30 years.
Regardig credit checks, they all do them when they receive an application. They look at all your credit history including adverse listings and other applications. You would be surprised what appears on there. They usually query recent hits. Regarding stating the loan in your assets and liabilities, if you can service all the debt, there is no reason not to state it.
When borrowing high LVR’s the mortgage insurers may ask for some genuine savings depending on if this is your first property or not. There are ways around this and many other issues to address. Talk to a good mortgage adviser and they should be able to guide you through easily.
Make sure you can service with a lender before taking on a personal loan or you might knock yourself right out of the market.
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auComments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
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