Hi all,
Im a newbie to the site and seeking some advise. My husband and I would like to start building a cash positive poperty folio and eventually renovate and sell houses. My issue is finance….my heads in a bit of a jumble over this!We own a home worth apprx $950K to $1mil. We have a joint mortgage of $550K but we have $540K cash in the bank due to the recent sale of my business (in our offset account).
Therefore we have access to cash and equity but my issue is that we are on low incomes, $130K gross combined (me $65K, husband $55K). Not so bad combined but l plan to stop working in about 12 mths to have another child.
So with an income of $55K what is the best strategy to be able to borrow as much money as possible in my husbands name (as director of company ATF family trust) and start investing?
I was thinking that in order to wipe all debts from my husbands name (ie. his share of the mortgage) and allow him to borrow again we probably have to pay off the mortgage with the offset money but then we have no cash for deposits and closing costs.
My other idea was to sell the house and rent (interest on $1mil would pay our rent), but it would be a shame as our house is going up in value – does anyone have any advise, would selling our home be the best way?Am I niave thinking $55K incme will be able to borrow – doesnt the rental money from the investment property get taken into account when evaluating servicability?
Am I missing anything??
Hi Victoria,
Not a broker and would strongly recommend you find a good one.
You are right about banks considering rental income in their sericeability calculators – and some banks recognise a larger percentage of your expected rental income than others. This is one reason a discussion with a good broker is invluable.
In terms of moving forward & without having a borrowing calculator on me I suspect your income will limit much in the way of additional borrowings beyond the $550K mortgage you currently have without you being required to pay some (all ?) of this off.
You will then be able to use the security of your own home to establish a line of credit facility which can be used for deposits and purchase costs. A separate loan secured by your investment property will provide the remaining funds required.
Given you are reducing to one wage I would suggest a cashflow positive strategy may be most appropriate at this stage of your investment journey.
Definately no need to sell the house.
Hpe this helps.
Hi Victoria
Firstly welcome to the forum and I hope you enjoy your time with us.
I have to say your situation is one we come across oh so regularly with clients and especially under the new Credit Act needs some careful structuring.
Yes lenders will take into consideration your potential rental income but not if you intend to buy and sell the property as this would be deemed as a development business and be fairly hard to obtain finance at all at sensible rates.
With your current cash savings there are a couple of options but if you seriously want to start structuring a business of buying and selling property i think i would establishing the facility now to enable you to go forward when you need to.
Certainly a line of credit might be an option however lenders dont like lump sum "cash out" so need to be fairly careful of choice of lender. Can think of a couple of lenders who would meet your requirements.
As i say everything is possible just needs to be careful set up in the first place.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
