Australias mortgage prisoners

Discussion in 'Property Market Economics' started by Herbert, 31st Aug, 2018.

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  1. Kangabanga

    Kangabanga Well-Known Member

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    Looks like its time for then to sell and lock in all that profit :) maybe retire ij Fiji or bali
     
  2. Illusivedreams

    Illusivedreams Well-Known Member

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    $10,000 increase wow

    They purchased in 2008 for 50% of todays value and they still cant get finance?

    To me this says they way over did It in 2008 and could never really afford it.

    Maybe time to sell and buy something more reasonable.

    $10k increase what their purchase price was $3,000,000 IO PPOR... Crazzy people..
     
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  3. Brady

    Brady Well-Known Member

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    I can't recall the application I had declined. If it's not a deal it doesn't get input. If I think it's a deal I'll take it all the way up the chain.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I've got a number of clients who built larger portfolios over time in this situation. Rents have increased, but in today's calculators, rental income counts for very little. Over the last decade they've never defaulted and they're cash flow positive on their loans even with the P&I repayments. They still can't get another penny from the mainstream lenders though.

    It's not really a big deal for them. They've got their portoflio, they've got the ability to pay a lot of it off over the next ten years and retire very comfortably. It's just unfortunate that for the past few years they haven't been able to do anything and this is unlikely to change in the immediate future (unless they pay cash, which some of them can do).
     
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  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    and i think that this translates to 80 % decline rate for some bankers/brokers ..........

    ta

    rolf
     
  6. Illusivedreams

    Illusivedreams Well-Known Member

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    True ..

    How much is rental income counted.
    So for every $100 is $60 counted towards income?
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    It's still about $80, but there's a perception that an increase in rental income will really help your serviceability. Unfortunately the effect is minimal given the number of deductions lenders take out these days.

    Consider if you're on a $100k salary and you've got an IP renting for $500 per week.

    A 5% rental increase is $25 per week or $1300 per year. In serviceability terms that might equate to paying the mortgage for a week.

    If you get a 5% salary increase, you've now got a $5,000 increase. The tax implications can mess with the outcome a lot, but it's probably worth 3-4 times more than the renal increase.

    A bit of a moot point though, not many rental increases or pay rises going around these days. :(
     
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  8. Lacrim

    Lacrim Well-Known Member

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    And I know its been touched on before but to confirm again, in your experience, is share/dividend income treated as rock solid as PAYG - no leakages, no exceptions, no 'shadings'?
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Unfortunately, it's probably worth less than rental income...

    The first problem is that lenders have different requirements for demonstrating the income, usually the last 2 years tax returns which can be difficult for some people. Others might settle for a recent income statement.

    A quick look at a few lenders calculators suggests that it is shaded (80% at a glance) and doesn't always take franking credits into account either. This suggests that it's effectively shaded by to as much as 56% of it's actual value.
     
  10. Lacrim

    Lacrim Well-Known Member

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    OK. s***t.

    I'm starting to wonder if banks actually want people to fail.
     
  11. Chomp

    Chomp Well-Known Member

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    GFC was caused by the banks irresponsible lending, no
    Banks or the Gubbermint ? nice way to bring down house prices and clean up on some stamp duty at the same time.
     
  12. Illusivedreams

    Illusivedreams Well-Known Member

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    Stamp duty is state based tax.

    APRA is a federal body.
     
  13. Dean Collins

    Dean Collins Well-Known Member

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    What nonsense......they purchased a property 10 years ago that has probably returned 120%+

    They are absolutely laughing.
     
  14. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    They may have a strong equity position, but they'll only realise this if they sell their house. They'd no longer have a roof over their head.

    Unfortunately you can't regulate people's circumstances or their bad decision making. The simple reality is that there will always be some people struggling with their home loan regardless of how strict you make the lending criteria.

    I've met people who were in hardship and about to loose their house, they come to me looking for someone to save them. It always seems to me that they can afford the home loan, but it's the credit cards, car loans and interest free period consumer debt that came after the house that they can't afford.
     
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  15. Chomp

    Chomp Well-Known Member

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    When states clean up on stamp duty there is less demand or leverage for federal funding one would assume.
     
  16. berten

    berten Well-Known Member

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    Word.