Borrowing Capacity?

@Rex - Won't surprise at all if it's under $300k ...

Any particular reason you don't prefer likes of pepper and all? Rates aren't that bad and some of them take actual repayments into account not the assessment rate..

Also, paying little higher to get extra borrowing esp. in growing market doesn't harm at all (provided numbers add-up)

To work out more accurate borrowing, will require more detailed info but as said before won't surprise if it's around $300k or under.

 

Sorry all, I clumsily used the term negative gearing to mean all investment loss deductions. I understand HELP repayment assessment does not count any net investment losses (i.e. negative gearing), and basically calculates as though you are neutrally geared.

That is madness - why would they not align servicing calculations with the way that the HELP repayment system actually works? It's not very complex. Does CBA think there is a risk that the government will decide to start assessing HELP repayments on gross income on something?

I had assumed that lenders would at least assess tax and HELP repayment liabilities on the basis of neutral gearing (ignoring negative gearing benefits).

Are there lenders that use a more sensible method?

 

It's just another example of lenders policies that don't align with how things actually work. Negative gearing, income assessment, living expenses, assessment rates. They all have similar examples.

I've' said it many times. Lenders need to rationalise many of their policies if they want to continue lending money.

 

I'm pretty sure CBA clarified its HELP repayment policy in October to allow some scope to put the actual HELP debt expense in. I believe it's now possible to do it properly based on actual amount taxed by verifying it appropriately. If unverified (i.e. not on payslip or banking credits), than they'll do it at the full rental + salary income - which isn't the same as the ATO. Its a bit backwards & does lead to servicing differences between some banks and others.

 

Gone over my head

 

To all the MB experts-if CBA is giving 630K abd NAB and Heritage Bank close to 699K and 700k respectively then what are the odds of getting approximately 1.1 or 1.2m loan from small lenders like liberty and other similar type?

Potential property (we liked) price is 1.8M and after negotiations and due to market correction vendor may accept the offer of 1.7m or 1.73 and add the stamp duty and other expenses 70K total approx 1.8m.
(Property didnt get sell on auction because duplex is on single title and land size is just under 900sqm)

Property doesn't require any work as it is brand new duplex and we will be living in one and renting out the another one (potential rental return 650 to 700 pw).

Hope to get realistic opinions.

 

Very very low chance, but there may be other ways such as low docs, ownership structuring strategies etc.

 

Thanks guys, don't rush is the key then, may be sit on it in the time being then.

 

Thanks Rolf, not at the moment.

 

ownership structure = as in buying inconjuction with someone else (3rd person)? If yes then
Do not want to share the title, it be just me and my wife

 

there is legal ownership and there is beneficial ownership. You could, for example, bring in a 3rd person who has legal title, but no beneficial ownership. later change titles for no duty or CGT.

Or you could buy using a company to avoid the nccp. Company could even be bare trustee for you.

 

Really depends on what else is already in place. Borrowing capacity with Liberty can vary widely depending on the circumstances. If you don't already have other debt then there's really no point in the non conforming lenders.

If you're thinking of waiting until things get better, you might be waiting a while. I suspect in the first half of next year, as we see the confluence of the Royal Commission report, plus a change of government, things are probably going to get tighter in the lending market.

 

House Prices are going down for exactly this reason - the old days of being able to buy, revalue, redraw to use as a deposit, buy, revalue, redraw to use as a deposit etc are over as banks are actually looking at your salaried income and expenses, and your actual ability to repay the loan from salaried income (as opposed to being able to pay off the loan by selling the property).

 

Will banks allow franking credits counted towards borrow power?

 

Depends on the lender, some ignore them completely, others consider them.
Do you absolutely need the franking credits to be included for what you want to do?

 

No. But it’s quite large so wasn’t aware.