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  • Profile photo of paul2010paul2010
    Member
    @paul2010
    Join Date: 2006
    Post Count: 2
    July 30, 2010 - 7:05 am

    G'day All,

    I'm after some advice with regard to the finance arrangements of our families investment properties.

    Situation is as follows:

    PPOR – valued at $520k
    IP1 – valued at $420k
    IP2 – valued at $720k
    IP3 – valued at $410k

    Loans:

    Loan1: $565k LOC secured against PPOR and IP1 for the purchase of IP1 and deposit for IP2
    Loan2: $520k secured against IP2
    Loan3: $360k secured against IP3

    Loan1 is in both mine and my mother's name.
    Loan2 is in mine, my mother's and my uncle's names.
    Loan3 is in mine and my wife's name.

    Income:

    IP1 rented at $700 per week
    IP2 rented at $530 per week
    IP3 rented at $350 per week

    Mother – $45k pa
    Me: $95k pa
    Uncle: $115k pa

    Ideally I would like to extend Loan1 to $695k to fund a renovation to IP1 and provide a deposit for IP4 and 5 however, due to the structure of our existing loans I can't get the serviceability right as the total value of each loan, rather than 'my  portion' is applicable.

    As such, I would like some advice on the financial arrangements of our loans in order to maximise our borrowing potential.

    Happy to provide more detail if required.

    Thanks in advance for your time and advice.

    Paul

    Profile photo of BankerBanker
    Participant
    @banker
    Join Date: 2010
    Post Count: 371
    July 30, 2010 - 8:00 am

    Hi Paul,

    You’ve given the names the loans are in but not titles?
    Can you list relation of family members to each property?

    PPOR and IN1 are worth total 940k. At 80% this is 752k freeing up to 187k. This is ignoring equity in other properties (noting your post indicates they are not crossed).

    Will you all be applicant or guarantor for the new loan?

    Note; yes, total loan is included in bank servicing If you apply in your own right. But the banks can take adjustment in to consideration. E.g.

    Debt servicing; fail
    adjusted debt servicing; pass

    comments; your banker or broker need to complete a strong argument as to why you can service the debt. Depending on your bank; there is sometimes room in their system to include a ‘related party’. This means they sign a privacy statement and provide income details for assessment however; are not an applicant or guarator on the application.

    Listing them as a related parties will allow a credit officer to assess their capacity to contribute to servicing the existing loans however not
    Actually be an applicant or guarantor on the new loan. Unless the bank can see the related party income they must assume you servic the entire debt.

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