I just got a call from my bank manager saying and future purchases will be hard as they can only use 8% of the annual rent for loan servicing.
It seems strange that they used to use 80% of income now only 8%.
So from my understanding if you have $200 p/w in income you only have $16 p/w for servicing the loan aka max loan $16,000!
This just doesnt affect mining purchases, this affects any investor in any area.
CBA statement:
"On Monday 25 November 2013, all Home Loan/Investment Home Loans and Lines of Credit reliant on rental income from a residential security for servicing must not exceed the 8% rental yield.
"All applications (including Home Seeker) decisioned after Sunday 24 November 2013, will be subject to the new rental yield cap…
"Customers who earn greater than 8% p.a. rental yield must be advised that the Bank can only use the maximum of 8% p.a. rental yield for servicing."
Only thing i could find out about it
Somebody want to explain the difference to him/her between rental income and rental yield.
you mean profit after expenses?
ok understand now if you pay $100,000 for the property and the rent is $8,000 p/a your yield is 8%.
westnblue wrote:ok understand now if you pay $100,000 for the property and the rent is $8,000 p/a your yield is 8%.Give that boy a coconut!
Freckle wrote:westnblue wrote:ok understand now if you pay $100,000 for the property and the rent is $8,000 p/a your yield is 8%.Give that boy a coconut!
Not really a true indication. Don’t forget insurance, rates, land tax, and the list goes on……
They will still use 80% of the rental income or 8% gross yield, whatever comes first.
500k property that you claim recieves 50K/annum rent (10% yield) will then be assesed at 8% or 40k/annum regardles of what the actual rent is.
Cheers.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
Looking in my own backyard and what's happened in Moranbah, Dysart, Blackwater, and Emerald, it seems CBA is finally wisening up to the risks of investing in mining towns.
There's a place called Blackwater? Awesome. Blackwater Park is one of my favourite albums.
Yes Tommy a Western Qld town which 10 years ago people only passed thru and didn't stop.
They then found some black stuff called coal and the whole world wanted to know the town.
Some people did very well investing in mining towns but just as many bought at the peak of the market and are sitting on negative equity and reducing rents.
CBA are only coming in line with a lot of other lenders.
Personally we never put any clients into mining towns so have not been affected but i have financed many a deal for clients buying such investment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
As always, any "goldrush" is all about the timing, get it wrong and you're reduced to living in a tent in the Klondike.
For that reason we have avoided buying motel(s) along the NSW coalseam.
Prefer to buy in areas where there are diversified and sustainable reasons for the investment to continue to provide a reliable ROI.
Cheers
thecrest
thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
You must be logged in to reply to this topic. If you don't have an account, you can register here.
