I have decided to buy a $340K IP to rent out at 300-320. Have 70K deposit and make $850 a week.
Have seen a MB already but he says with the deposit he can only lend me $264K on top of the $70k without paying LMI.
I thought having a deposit of 20% with 70k will get me a 350k loan but he worked it out slightly diffently.
He also offered me the cba's 3yr economiser home loan. Its 3 years at 8.65% variable. The other option was a pro pack with .7% off giving me 8.62% above $150k also with the cba.
Both options are very similar except pro pack has a $350 annual fee and an offset account.
I am favouring the pro account as any excess money i have will be put into the offset to negate the $350. Also if i ever needed the money i can redraw money from the offset account without fees whereas the other option will cost $50.
Are these loans any good should i be looking else where.Hi Fujitsu
I think either you or your MB are getting confused about the situation.
There are other considerations and these will depend on whether you have any existing liabilities, whether you intend to purchase a PPOR for your own occupation etc etc etc.
With more information it is difficult to provide you with a more accurate answer.
Richard Taylor | Australia's leading private lender
I have no other debt of any kind. This will be my first house and planning to live in it for at least 6 months to get the goverment grant. I will be buying land (180k) and building a house on it(150k). Land is to be settled in november.
I currently live with my parents and after this house is built the whole family would be moving into it. My parents home will be rented out. They currently own their PPOR outright.
The problem is i do not make enough income to afford a $330k loan. MB would let me borrow between 180-200k on my income. He said it is possible to borrow up to 350k if i borrowed as an investment loan and the property would be an IP.
While the house is being built i would just pay the interest. After the house is built we move in and my parents PPOR will be rented out to help pay off the loan.
The other option was to build the house with my parents but i would not have been eligible for the grant as they already own houses.
Just looking for opinons for the best way to finance it.Sorry but i am still confused.
The land will cost $180K and the construction $150K being a total of $330K.
You have $70,000 deposit so presumably will be looking for a loan of around $260,000.On your income you would be able to borrow $260,000 with the right lender.
I dont see the problem. You presumably only need the $260K not much more although correct me if i am wrong.
Richard Taylor | Australia's leading private lender
Yes i need another $260K. But at $260k repayments are around $470 a week just over half my income($850). No bank in Australia will lend me that. I actually asked a few MBs. One said 180k flat no more. The other said $220k max.
The only way around was to apply for an investment loan and declare it as an IP so i could borrow more from the rent income.Sorry Fijitsu i have to disagree.
Given the accompany circumstances I believe it is possible to obtain the loan at $260K.
The Bank would want you to put your deposit upfront with the land purchase and then fund the construction.
Richard Taylor | Australia's leading private lender
If you say it is possible what bank are you thinking of?
With the cba loans i also get free establishment fees. Infact the only thing i have to pay is the settlement fee at $100 and progress payment fees of $50×5 during construction. Interest is around 8.65%.
If you can arrange a loan similar to this through a owner builder loan i am interested in finging out more.The main reason i am intterested is because currently the house is being built as a IP and i wont be able to get the grant of $11k until i actually move in. Should be sometimes around november next year. But if i get the loan as a PPOR i can get the grant during construction. That's having 11k sitting in an offset account during construction so i pay less interests.
As a guide, you can generally borrow approx 5 to 7 times your gross annual income.
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
Why do you want to go 'Owner Buiilder'?
Taking into account the earlier mishap in your calculations of 80% LVR, and also that it is your first home, it might not be the best strategy?Also, what will the value of the property be when it is complete?
It certainly sounds like you should set it up as investment to ease your servicing pain. As long as you 'intend' to move into the property within 6 months, you wont lost your grant. Also, don't be to fussed with the grant sitting in an offset etc, as the funds will be drawn down progressively over time. The loan will be biggest right before completion.
Sorry i dont think it is owner builder. I am just buying land and getting someone else to build.
I know this area very well as i live within a few kms of it over the last 20 years and have been looking on the internet and been to house inspections to see value of similar houses in the area. A 3BR single garage home will cost between $340k-$360k. A 4BR double garage house will cost over 400k. I am buidling a 4br double garage home. I am buying land at 180K plus 7k government charges. To build the house is 150k. Land is settled in november and house will be finished next november so i calculated interest during this period to be $17k.
I add another 20k to the budget for floorings and other expenses. Thats 374k. I get grant of 11k so $363k.
If i like the house i probably keep living in it. Have to live in it for 6 months to get the grant and make up my mind then. If i dont like it will sell for 400k. Thats a 26k profit and i dont have to pay CGT. Well 13k profit as i will be paying $480 for the 6 months i am living there.I am also looking into family equity loans as well. Instead of using the 70k cash as deposit am thinking of using my parents PPOR as secutity. Then use the 70k in an offset account. The benefit with this is that i dont tie up the 70k and use it for something else though i have nothing on the horizon. I also will be able to get the grant during the construction.
The problem is i konw there will be more paper work. Also what are the interest rates like compared to normal loans. I also know there will be other fees because i believe two loans needs to be established and two properties will need to be valued. I also believe taking out my parents PPOR as security when i have enough equity will also cost me.Hi
Why don't you contact one of the forum mortgage brokers and discuss it. As indicated they can make it happen based on what you have shown.
Cheers
SGDon't forget realestate fees when you sell they will eat that $13k. be carefull with building get all fixed quotes as you can easily loose that $13k on unexpected costs. you would almost be better of offering $350k or less for one that is already built. but thats just my thoughts you may have other ideas
You must be logged in to reply to this topic. If you don't have an account, you can register here.
