Borrowing capacity

Discussion in 'Loans & Mortgage Brokers' started by freddy, 18th Jan, 2022.

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  1. freddy

    freddy Well-Known Member

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    Hi All,

    have lending criteria been tightened recently?

    seems like can’t get a decent loan given;

    7% LVR on a $2.5m property
    200k combined household income.

    No other major debts.

    Thanks
     
  2. Gen-Y

    Gen-Y Well-Known Member

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    Do you have savings?
    Seems a bit out of reach to buy $2.5m property.

    $1.5m is already stretching it.
     
  3. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    7% on $ 2.5m is only $175k . Would hardly call that stretching it.
     
    Last edited: 18th Jan, 2022
  4. Morgs

    Morgs Well-Known Member Business Member

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    7% or 70%?
     
  5. ParraEels

    ParraEels Well-Known Member

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    I noticed that many lenders have already enforced higher benchmarks (DTI 6) and thus the borrowing capacity has been reduced.

    10.8% decline in my borrowing capacity with the same lender. Oct 2021 pre-approval expired and new pre-approval with the same lander came back 10.8% lower. No change in income or debt. Lender introduced DTI x 6 and a higher serviceability buffer.

    Anyone else has a similar experience? My lender was Westpac...
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    assuming no other debt you could potentially borrow up to around $1.4mil potentially - depends on a lot though
     
  7. Gen-Y

    Gen-Y Well-Known Member

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    You don't come into the forum asking about decent loan given if it is only $175k borrowing.
     
  8. freddy

    freddy Well-Known Member

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    ruby is correct only 7% LVR on a 2.5m PPOR not a typo.
    That’s why wondering how some people I see are up to their eyeballs with $7m total loans on high LVR.
     
  9. Trainee

    Trainee Well-Known Member

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    And what is the broker saying your loan capacity is?
     
  10. freddy

    freddy Well-Known Member

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    why so low. Looking to buy a property $1.25m incl stamp duty.
     
  11. Trainee

    Trainee Well-Known Member

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    DTI of 6 sounds about right?
    Net assets / equity doesnt mean much for borrowing capacity.
     
  12. freddy

    freddy Well-Known Member

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    $450k loan balance
    Less offset savings
    $165k net debt on a $2.5m-$3m property
    Can’t I just max out LVR to 80% on PPOR LVR and have $2m equity release in $100k parcels for IP purchases
     
  13. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    Why not ??? It is a very valid and interesting question. It is not a very big loan given the equity and income. You might have deep pockets but a million bucks could be considered a decent loan by many.
     
  14. freddy

    freddy Well-Known Member

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    Was net assets helpful previously? Who’s going to be able to buy either first home or investor at these strict lending limits. The banks not consider cash neutral or positive IP potential?
     
  15. freddy

    freddy Well-Known Member

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    But it will be cash neutral or positive from rental returns and depreciation deductions.
     
  16. freddy

    freddy Well-Known Member

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    6 x household income. How did other people on these forums have loans up to $7m?? $1m household income??
     
  17. freddy

    freddy Well-Known Member

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    7%
     
  18. freddy

    freddy Well-Known Member

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    I think it’s across the board? What about 2nd tier lenders?
     
  19. freddy

    freddy Well-Known Member

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    Trying to help out rental crisis by buying a property to be rented
     
  20. Trainee

    Trainee Well-Known Member

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    Not at the qualifying rate.

    Pre-APRA changes.