I am extremely new to this, I am desperately wanting to start a portfolio but don’t know how. Bank will most likely not lend me more than another 10K, and I’ve been told you can use equity in your home somehow.
My house is valued at around $180,000 more than we owe, we have only $2K saved up as I’ve just started saving. I am on a part time wage so we are heavily relying on hubby’s income.Any advise and information greatly appreciated
Not sure what your asking or wanting to know??
Let me take a punt
1. You may have equity in your property; but you need to be able to AFFORD any increase in your loan as well
2. Drawing out equity from your property = increasing your loan by the amount you draw outSay you have $50k equity available in your property; your income needs to be high enough to afford a 50k increase. so really if the bank advise you can only afford another 10k( which is peanuts)…it sounds like you won’t be able to afford the amount your after.
10k is not a lot; do you agree with what the bank as told you? they could have gotten it wrong, i know i have in the past… mistype by one decimal place
Before considering how much equity you have, you need to know for sure how much the bank will lend you ie your serviceability.Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
kat13 wrote:I am extremely new to this, I am desperately wanting to start a portfolio but don't know how. Bank will most likely not lend me more than another 10K,Hi Kat
Welcome to the forum.
Is this the advice of your bank or your own assumption?
kat13 wrote:and I've been told you can use equity in your home somehow. My house is valued at around $180,000 more than we owe, we have only $2K saved up as I've just started saving. I am on a part time wage so we are heavily relying on hubby's income. Any advise and information greatly appreciatedYep, you sure can. We have heaps of clients that have kickstarted their portfolios by tapping into the equity in their home.
As Mick mentioned, your first step is to work out how much you can borrow. A decent broker will be able to advise – they will also have access to multiple lenders with various ways of working out your borrowing capacity.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Kat firstly welcome to the forum and I hope you enjoy your time with us.
Sounds like you would want to be getting a second opinion as it could well be that your lender as Michale has mentioned is either wrong are ultra conservative when it comes to serviceability.
I can think of a few lenders who would be like this when it comes to equity release but in saying that many others who are not so.
Without hard data it is hard to tell you whether they are wrong and mistaken or just darn shy at lending you anymore.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for the warm welcomes, I am really enjoying reading all of the info out here.
Well my assumption on the 10K thing was simply by doing some online calculators through the ING website (who I am with for my own home). I have since spoken to a broker who believes it’s quite possible to purchase up to 400K which is quite scary for me. It’s been suggested to get a pre-approval based on what we’ve got, then maybe in second half of year after we have come back from our overseas trip and I have a recent group certificate (which I didn’t have for the last financial year) then to start moving along.
ok wow…something must have went terribly wrong- 10k borrowing capacity to 400k!?
Apply for the pre-approval when you are ready to buy + have all the paper work in place. Ie no point applying if you need to submit the group ceri which you clearly dont have with you now?
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Yep, that’s what I was told!
I am questioning it too, as your first reply said I thought the same, I’d need to be able to afford it anyway.
Think I’ll hold off for a bit, see where we are in 6-12 months time with a deposit as well.
Hi Kat
Seems like a reasonable thing to do.
I always tell my clients not to worry about how much the bank will lend them – instead, work out what you're comfortable with repaying each and month and use that as your benchmark.
For what it's worth, ING aren't the best when it comes to working out borrowing capacity. I also suspect you may have not included the proposed rental income that the investment property will receive in your online calculations?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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