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Borrowing capacity for PPOR and IP

Discussion in 'Property Finance' started by SE OH, 14th Sep, 2016.

  1. SE OH

    SE OH Member

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    12th Sep, 2016
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    Location:
    Sydney
    Anyone knows rough general rule of thumb?

    I reckon it is different as IP will bring rental income once leased out
     
  2. tobe

    tobe Well-Known Member

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    If you haven't got a PPOR you will need to rent somewhere else, so the rent in, and rent out means you are in roughly the same position.
    If you have a fully paid off PPOR then you can borrow more for an IP.
    If you are living rent free with a relative a couple of lenders wont put a nominal market rent in their calculator when purchasing an IP and with them you would borrow more for investment.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    There's too many different inputs/outputs to consider - so a rule of thumb is impossible.

    As a general rule - if you want to maximise your borrowing capacity. Earn tonnes, live at home with family and don't take on any consumer debt.

    Cheers

    Jamie
     
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  4. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Way too many variables to consider - there's occasions where the borrower capacity for a borrower will be higher for a PPOR, in other cases it's higher for an IP. It all comes down to the expenditure for the house you're living in, estimate rental value for IP etc. In most cases the IP borrowing capacity will be significantly higher than PPOR if your existing mortgage/rent isn't exorbitant.
     
    Michael V likes this.
  5. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    9th Jul, 2015
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    Location:
    Perth
    Money in V money out and whats left (kind off) is what you can use to service debt.

    Get an MB to do an assessment for you to see where stand and whats possible for your unique situation.