Hi Experts,
Can anyone tell me how much finance bank can approve someone for investment?
For example If I have my current borrowing capacity of $500,000.00 and I purchase my first investment property worth of $400,000.00 with 20% ($80,000.00) from my pocket as deposit and 80% ($320,000.00) from bank.
To manage this property I have to spend $160.00/week after all tax benefit and other expenses.
If I want to buy another investment property worth of 400,000.00 with 20% my own deposit.
1. Can bank lend me 80% for second property?
OR
2. Bank only lend me $500,000.00 – $320,000.00 = $180,000.00 (considering my income is same)
How does bank calculate my borrowing capacity for next IP purchase?
If I didn't make my self clear please let me know. I will provide more information.
Its not that simple because you will also be able to take into account the rental income from the new purchase too. WIll depend on how many kids you have, credit card limits, car leases etc. Each bank is different too.
As a rough guide you can borrow, in total, approx 5 to 6 times the annual incomes – including rents.
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
As Terry has mentioned there are a myriad of variables.
Some lenders take 75% of the current / potential rent other upto 100% if the property is not being used as security.
Some take negative gearing into consideration others dont.On the expenses side:
Living allowances vary depending on what scale the lender uses (although admitedly most use the HPI)
Then there are other loans do they take the actual repayment or the sensitised repayment
Do they take a percentage of your credit card limit or do they take nothing on the basis you can show you pay it back in full each month.All in all there are too many variables to give you an accurate answer.
If you structure the loan correctly from the start then serviceability will be a lot easier in the future.Richard Taylor | Australia's leading private lender
Approval of your loan request depends on how well you present yourself, your business, and your financial needs to a lender. Remember, lenders want to make loans, but they must make loans they know will be repaid. A well-written business plan is a good way to give the lender an overall picture of your business.
In Australia lenders wouldn't even look at a business plan.
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
As Terry has mentioned a Business Plan wont even get you past first base.
Most loans are credit scored and if you fail the credit score then everything else is meaningless.
It is more about knowing the in and out works of the lender and their requirements when it comes to a combination of Credit Score / UMI ands DSR.
Richard Taylor | Australia's leading private lender
karenhudson66 wrote:Approval of your loan request depends on how well you present yourselfPresent yourself? I never met a person getting my last loan. It was all internet, phone and Aussie Post.
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