Hi
Heres a curly one I hope someone out there can clarify for me.
My husband and i practically own our PPOR ($40k mortg). Home worth $650k.
We have an IP almost positive. Loan of $390K valued at $450k.
We are about to purchase a waterfront property we got at a good price for area. ($785k) Will reno and sell for profit. Not sure if to have as PPOR and rent out existing PPOR as capital gain could be substantial. Waterfront property will bring in more rent.
Question is the bank is quering if we can service this? Is looking tight on our gross income. But he is suggesting a low dock fixed loan of 7.19% leveraged at 66%. We have thaught of selling the IP but this costs us about $50 extra a week. The capital gain will help though.
Help. I don’t want to loose this deal.
Thanks!!Funny that the Bank fully aware of your income details would then suggest a lo doc loan. Nothing like double standard in underwriting.
I am unsure whether you are self employed or employed but in either case a lodoc or nodoc loan would seem to satisfy your needs as LVR appears to be satisfactory.
Couple of things to consider:
1) Check and see as the loan is > 60% whether the lender is wishing to charge you mortgage insurance.
2) You mention you are seeking a fixed rate of interest. Why if you intend to renovate and then sell would you take a medium term fixed rate.
3) Check out the early repayment fees or deferred establishment fees on a lodoc loan.If you are happy with the above then why not go for it. Make sure that the lender offers a rate lock facility so that you can ensure the rate quoted and the interest rate at settlement are the same.
If you are not happy with the terms and conditions offered get a broker to shop around for you as the lodoc market is now extremely competitive
Cheers
Richard Taylor
Residential & Commercial Finance Broker
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Get a good broker to shop around. What one bank says is a close call, another lender will piss it in and give you cherries on top..
Live, Learn and GrowLifexperience
Thanks for your reply and so promptly.
Yes we are self employed so income looks better on paper. Have dealt with this bank for quite some time and have a good relationship with manager. Yes we have to pay mrtg ins which i’m trying to avoid as more borrowing means more repayments. will go and shop around to see if bank will match.
Bank suggested fixed rate. I am not happy with this idea as it makes repayments higher for the short term. Think he suggested it due to low income.
Can we refinance PPOR into equity mgr or interest only and draw part of the money for the IP so not to pay mrtg duty and how does this work for tax?
Maybe need a finance adviser. Know of one down here on GC?regards
PorkyPorky,
I would suggest that changing your PPOR loan into an wequity manager would not be a great idea. You can keep the standard loan and a seperate equity manager against the same property, this would be much cleaner and will keep you non deductable debt on a lower rate.
Regards
Alistair
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