Hi
I purchased my first property in Oct 2007 (for $292,000 in Woy Woy NSW, I borrowed 95% of the total) and I am now interested in buying my first IP. My salary has been increased to $65,000 starting in July 2010 and my current income is $57,000. My liabilities are a personal loan of $20,000 and my mortgage. I also estimate a tax refund of around $10,000 for 2009/10. What is my chance in obtaining a loan for my IP of $200k to $250k? Can I use my equity from my first home if any? My main concerns are that my current home is under renovation and might not be valued very well and my personal loan of $20k.
Your advice on this matter is greatly appreciated.
There are two issues – equity and serviceablity. You will need both.
If you borrowed 95% and your property hasn't gone up much, then you have hardly any equity. If the proeprty has gone up then you will need to squeeze out at least 10% for the new purchase. 5% deposit and 5% for costs.
For the income you can take potential rent into account as well as your income, but having a personal loan will hurt because of the high interest rates and shorter term. If might be wise to use the $10k to pay this down and try to pay it off asap.
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
Thanks for your advice Terry.
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