Should I ask my mortgage broker for an estimate of how much I can borrow to plan things before asking for a pre-approval, or is it I should just ask for a pre-approval to get a more accurate figure?
At the pre-approval stage, when working out borrowing power, are the following taken into account: rent/yield, depreciation, tax deductable expenses, income tax withholding variation, capitalising of interest. Are these taken into account at the final loan approval stage?
Do I need to provide estimated rent/yield figures to the broker, it will depend on whether it’s a unit/apartment or a house because each would have a different rent, and would result in different borrowing power? But I would need to know how much I could borrow before deciding if I will buy a unit/apartment or a house.
Thanks
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This topic was modified 10 years, 5 months ago by
magic32.
Depreciation, tax deductable expenses, income tax withholding variation, capitalising of interest.
Non of these are taken into consideration on either a pre-approval or a formal approval as lenders ignore them when calculating serviceability.
In regards to the potential rent lenders in the main will take their valuers rental assessment of the property as far as serviceability is concerned unless the property is already tenanted.
Your Broker can factor in a standard yield return when working out how much you can borrow.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Should I ask my mortgage broker for an estimate of how much I can borrow to plan things before asking for a pre-approval, or is it I should just ask for a pre-approval to get a more accurate figure?
Hiya
Advice on structure/borrowing capacity will always come before lodging a preapproval.
Don’t bother lodging a preapproval until you’re reasonably certain that you’ll be purchasing something within the preapproved period (generally 3 months). Also make sure that the preapproval is placed with a lender that actually assessed preapprovals.
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]
A broker will go through your financial situation, future plans etc before submitting a pre-approval. A part of this will include calculating your serviceability with their panel of lenders.
Lenders generally take into account rent, interest, generally negative gearing addbacks with rental properties. They don’t factor in IP depreciation or cost deductions. They also generally only take into account 80% of rent received and potentially inflated interest rates to act as a buffer for future rate rises.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Thanks for the responses.
Do you think I should get an estimate (not pre-approval) from two brokers. Because different lenders could have loans amounts which vary considerably like 50k-100k difference. I don’t feel good about this though since I can only get a loan through one of them.
Are you speaking to an actual mortgage broker or a banker at a particular bank’s branch?
If you’re speaking to a broker I see no reason why you would engage more than one for the reason you’re stating. A broker should have access to a wide panel of lenders to chose from and not just one particular bank. So then they would be able to give a more accurate representation of what you can borrow and with who.
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
Given that the Broker is giving you his time and expertise for free i think it would be an insult to go approach 2 separate Brokers and see which one comes up best.
A good Broker will be able to give you a pretty good estimate of what you can borrow without making a full application.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Agree with Richard, no need to contact two. Have a chat with a couple and pick the one that you believe you can work with to reach your goals.
A *broker* (not a branch staff member) will be able to simultaneously run your serviceability across dozens of lenders at once, and factor in a lending strategy to try extend these figures over the long term – so there is no need to see multiple to see what figures each come up with.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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This topic was modified 10 years, 5 months ago by
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