All Topics / Finance / 2nd IP and can’t get finance!! WHYYYY!!

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  • Profile photo of Dan19Dan19
    Participant
    @dan19
    Join Date: 2009
    Post Count: 14

    Hey guys,

    We are looking at getting our 2nd IP in Melbourne and currently having problems with finance. Both our PPOR and IP are under my dads name and we spoke to a broker working with RAMS, which is a part of WESPAC. He said our situation is tight but me and dad feel we can afford the monthly repayments at ease.

    PPOR $200,000 owing and worth approx $650,000
    IP1 $600,000 owing, worth approx $750,000
    I'm currently studying full time and have been working casually at a company for 2 years, low income. Dads been an accountant at a hotel for roughly 10 years and has a secure income of approx $70,000.

    There is no problem on the repayments of our IP as it is rented out to students per room and currently returning $5500 p/m, but its cash. The broker said our PPOR is linked with our IP for security reasons and that it would be hard to get another loan. Also, the broker said that our IP was bringing us down heavily because it is rented out privately with no contract or documents to prove, this is understandable but with the rent were getting, why would we want to rent the whole house to a family for 450-500p/w. We want to get another property around $500-000 – 600,000 hoping to do student accommodation as well.

    I'm thinking of going to another broker or bank to check out our options, what do you guys think?
    Would it be any easier if we borrowed overseas money to pay off our PPOR then get a loan higher than the value of the house and pay them back? Is that do-able or would it make any difference? I asked the broker but he said best thing would be to put a 20% deposit with that money, but he didn't understand that I would need to pay our relatives back ASAP.

    Any advice is appreciated, PLEASE HELP!!!

    Cheers
    Dan

    Profile photo of Dan42Dan42
    Member
    @dan42
    Join Date: 2008
    Post Count: 619

    When you say the rent is 'cash', is it declared on a tax return? Can you show a tax return that verifies the income you are receiving from the first IP.

    If the rent can't be proved, it doesn't exist.

    Profile photo of fredo_4305fredo_4305
    Participant
    @fredo_4305
    Join Date: 2009
    Post Count: 336

    If the rent is from students you can still do up agreements as proof to show the bank.  You can also deposit the rent yourself (once the give it to you) and give them a receipt. 

    Declaring it would also help.

    Profile photo of number 8number 8
    Participant
    @number-8
    Join Date: 2010
    Post Count: 333

    There are many, and I would say,  more opportunities to create wealth legitimately. I have many clients that come to me that do not pay tax. My response is always the same….. Where you save a dollar in tax, you lose hundreds of thousands in loan capacity. Loan capacity creates wealth. Without the ability to leverage, wealth creation is restricted.

    http://www.birchcorp.com.au

    Profile photo of Dan19Dan19
    Participant
    @dan19
    Join Date: 2009
    Post Count: 14

    blackhotel: thanks mate, ill give it a shot.

    number 8: that is so very true.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Black

    Thing you are living in the past my friend.

    Cant think of too many lenders where you dont actually have to declare an actual income on a lodoc loan these days.

    Richard Taylor | Australia's leading private lender

    Profile photo of blackhotelblackhotel
    Participant
    @blackhotel
    Join Date: 2010
    Post Count: 140

    I've just got  refi documents with me now and I am signing the declaration that I can afford to make the payments. The refi is with RAMS. Also, I do have a history with Rams, maybe that's why.

    Profile photo of god_of_moneygod_of_money
    Participant
    @god_of_money
    Join Date: 2008
    Post Count: 970

    It is always an issue with student accomodation. I don't think the bank will follow the actual income. I believe that student accomodation is fluctuate (i.e. high turnover and not full 12 moths).

    Bank always used the market value to estimate the rental income ( to be realistic)

    Profile photo of Dan19Dan19
    Participant
    @dan19
    Join Date: 2009
    Post Count: 14

    duckster: The relative is now in Australia lol, i just thought if i paid off my PPOR it would make it easier with banks to get a loan.

    blackhotel: The broker i spoke to mentioned nothing about a lo doc loan to me and dad, maybe ill speak to him again. Thanks

    god_of_money: Yes your right, it is always fluctuating. Luckily since we bought the house it's always been full of students and when one leaves, another comes straight away.

    I recently spoke to my friend working in lending with ANZ, he said with lo doc loans u don't have to prove any income, just equity of your properties and something about 60% =S.

    Profile photo of blackhotelblackhotel
    Participant
    @blackhotel
    Join Date: 2010
    Post Count: 140

    60% LVR. Means they will borrow up to 60% of the value of the property. Actually I just got alow doc  loan through ANZ with a 60% LVR  and your right I did not have to prove my income . The rate was 6.7%, just as good as any full doc loan. It's going to be a flip so 60% LVR no LMI was fine with me. But the BEST thing was not going through all the hoops of a full doc loan. Low Docs loans are AWESOME! If you want 80%LVR then you need to pay LMI. A small price to pay for better wealth!

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