Hi Everyone!
I am a new member and glad to join!
I have just bought my first property for myself to live in, PP is 420K, P+I Loan is 315K (rate at 6.9%). I will be able to get some rental income ( at least 420/week) for this property. I used my own name to purchase this property (perhaps a first mistake?? that i should have followed the family trust structure that Steve suggested!!!) My current income is 55K/year before tax.
My question is, I would like to purchase my first IP and to set up my invest structure, will I be able to borrow 80% from lenders using family trust and company trustee method when I have a 315K loan towards the first property? For remaining 20%, could I use the equity from my first property or I need cash for that??
Thanks for your help!
Regards
Joy BrownHi Joy
Firstly welcome to the forum and i hope you enjoy your time with us.
I dont want to put a dampner on your investing dream but from a quick number crunch i cant see you having any chance of showing satisfactory serviceability for additional borrowing even given the potential rental income.
Obviously without being aware of the complete picture it is difficult to analyse fully but from the base numbers you have given you would not qualify.
Before you go the expenditure of setting up a Pty Ltd Company / DFT I would check your borrowing capacity first as it will save you a few dollars in set up fees.
On a separate note assuming serviceability is evident then yes you would try and access the deposit (10-20%) plus acqusition costs from your PPOR and take out a standalone loan on the new property. If you have cash savings these should be placed in an offset account linked to the non deductible debt.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard
Thanks very much for your reply. Is it because of I used my name to purchase the first property so I will not be able to show satisfactory serviceability and hence no hope on borrow more money even I set up the Pty Ltd company/DFT? If I use Pty Ltd company/DFT on my first property will this change the whole story (eg. able to borrow 315K from different lenders as Steve suggested)?
Cheers
JoyHi Joy
No sorry it would make no difference at all.
Steve has clarifed that point a couple of times in the last few years.
Borrowing in a Company or Trust name does not in the main increase your borrowing capacity.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard
Thanks.
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