Hi All,
It is great to be back in this forum and i have been reading many articles from everyone with keen interest.
In my quest to become a property investor i still have a long way to go and have come up with a question concerning obtaining finance to buy my own PPoR. The question is will i qualify for finance?
Here is my situation:
Investment property, Valued today by ANZ bank at $360K, owe $86K, Rented at $260p/w
The ANZ bank said kerbside valuation was $380K back in October but now the full valuation with LMI is $360K?
Myself, staying at parents so no costs (Lucky me!)LOC increased to $160K today so i can use $90K as a deposit if i can borrow from another lender at 85-90% LVR
and the other $70K will be for business use
Self employed with ABN for 2 years and voluntarily GST registered starting on March 1st (still have 2 weeks to wait)
Estimated Net Earnings this F/Year $80K. Last F/Yr was $50K.Would i qualify for a low doc loan 85-90% for $270K if i have no debts except the investment property $86K?
My main concern is does the lender i will borrow from consider the LOC i have of $160K as part of my debts much the same as a credit card even though i will only be using $60K LOC for business purposes? If this is the case i don't think i would get a loan based on the LOC amounts, is this correct?
From my understanding, it is good to clear all credit limits before applying for a home loan so i can borrow maximum funds but is a LOC treated the same as having a BIG credit card limit?
It would be great to hear anyone with fiancial savy to assess my situation.
Thanks heaps
RobertHi Robert
I am not sure who structured your loan with Anz Bank but is does not seem to fit well.
There are a couple of reasons why the Bank will do a kerbside / full valuation so not a lot can be done about that.
In answer to your questions:
1) Yes the additional Line of Credit will be consider as a liability for any new potential lender.
2) Anything over 80% LVR and the number of lenders offering lodoc product is substantially reduced. You fees and set up costs will be higher along with the rate of interest.In saying all of this i think there are several better ways you could have gone about the refinace and new loan and still achived the same objective at a cheaper cost.
Richard Taylor | Australia's leading private lender
HI Robert,
1, Yes the LOC will be treated as liability for any new borrowing.
2, Yes you can get LVR 85-90% Lowdoc. But a better way is to re-strucure the existing and new loan.Richard Wu
Qauliy & Easy Financial Solutions
02 8814 7686
[email protected]Thanks for the above 2 comments as they have confirmed my fears.
Great to hear also from Qlds007s as i consider your financial advice "The Bible" of finances.
Well, i have obviously not structured the LOC loans properly as i organised this myself but i still don't understand how this could be structured any other way.
Here are some more details:
* Investment property – full doc loan with ANZ bank
* 2 seperate ANZ LOC's (Low Doc). One for business and one for personal.
These 2 are seperate so i don't mix personal with business.This was something i learnt from this forum not to mix the 2 together so the deductible expenses such as interest can be claimed with ease at tax time and the LMI over 5 years.
As i recently applied for an increase in LOC for both accounts $90K Personal & $70K Business, the ANZ advised that my LVR is now higher than 60% for the LOC and will need to charge LMI. Is this why they did the full valuation of the property?
I tried to avoid the LMI although i need the $90K as a deposit for a PPoR since i don't have the savings in cash and $70K for my business (sole trader) to buy more stock. I really did need these 2 LOC amounts so i'm not sure how i could have organised the finances any differently?
My dilemma is:
1) If i didn't obtain the LOC of $90K then i would not have a 10-15% deposit for the PPoR and
2) If i didn't have the $70K LOC then i would not be in business for very long.This is where the confusion sets in. Should i refinance the investment property or just try and hope that i will be able to obtain a low doc loan for the PPoR?
I was hoping that once i increase the personal LOC then i could put a deposit on a PPoR since i am using equity to fund the deposit. Then after a couple of years, i could look at ways to reduce my taxes by buying a 2nd investment property. Once again i would apply to increase the ANZ business LOC so i can use this equity as a deposit. This would ensure that i could keep buying properties every few years under $300K.
Is my income too low at $80K net to be buying a PPoR for approx $300K? Do i still need to restructure my loans based on the further information i have provided? If this is the case, then i will need assistance from someone on this forum when the time arrives to buy the PPoR this year.
Thanks again for the kindly support.
Robert
Hi Robert
I thank you for the kind words and certainly try to assist where possible.
Yes Anz like many other charge LMI on a lodoc loan where the LVR is > 60%.
In saying this remember LMI is a deductible loan cost where used for investment purposes however not for a PPOR.I think we might be able to do some tweaking of the loan set up to get you over the line. If you go over a 80% LVR and need to do this lodoc you are more than likely to incur either LMI or a higher application cost / interest rate.
Drop me an email and we can sort out the problem for you.
Richard Taylor | Australia's leading private lender
Thanks Richard,
Have dropped you a line and received your advice by email.
Thanks again for your assistance and i will be following up with you with what we have discussed as it was very informative.
It is almost like a secret discovery yet the information was already there for everyone to see!For everyone who is looking at investing or increasing their investments, there is no better solution than getting the structure right from the beginning. It will save you thousands of dollars and allow you to keep the ball rolling with more investments.
Don't be foolish thinking you can do it yourself as i can assure you i have read many property investor magazines and even hundreds of post on this forum but there are still little issues one can miss and mess it up.
I already knew about the basic stucture such as not to cross collateralise and have seperate LOC's for both personal and investment as i have been reading this forum for a while now but there is much more to it than this.
Find a mentor like Richard who will save you the headaches later on. Get it right from the beginning.
Ten seconds of your personal time can save 10 years off your investment timeThanks again Richard
Robert
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