Hello. Didn't want to write a long post so below is a summary if you don't want to read the whole thing. Looking to buy an IP for 450K but might only be able to borrow 350K Have 145K in equity according to the broker Not sure if I should change my current goal from having an IP close to Sydney as a backup home or buying in Brissy or GC and not have the IP as a backup home Not sure if the broker is giving me the best advice Not sure if seeking a financial planner's advice would be better, costly or necessary Seeking your thought's/opinion's Hi everyone, I stumbled across this forum last night after meeting with my mortgage broker's associate (my broker didn't put our appointment in his diary). I was really fascinated by some of the strategies posted by Terry_w and was up till 5 am reading some of them and also reading other member's investment journey's. I had no idea that there are many options and strategies out there and after some preliminary bad news from my broker's associate I've realised that I need some help and I'd really appreciate some advice/guidance. Briefly a little info about me and my situation. I'm in my early 30's, have a better half and a beautiful little girl. We have a PPOR with a mortgage of roughly 550K and a property value of around about 900K. My attitude in life is to expect the best but be prepared for the worst and this is what is driving my future plans. My current goal is to buy a property close to Sydney (somewhere up the coast) and eventually retire there, my budget would be 450K for this IP. This IP would also serve as a backup property in the case of any major unforeseen circumstance I could sell my place in Sydney and move up the coast, pay down some of the IP debt with the Sydney profits and lower my cost of living while not being too far away from family. I'm not sure how equity works but I gave my broker's associate my financials and he said that I have 145K in equity and I could re-finance without the need for any LMI. Everything was looking good until he checked my serviceability. My credit card limits are extremely low (<5K all up) and only a small car loan to our name (around 5K) and a potential IP rental income of $375 p.w. I was surprised when he said that my serviceability check failed and i had a shortfall of 100K. I think that financially I can manage the loan amounts that the broker suggested with only $150 a week out of my pocket. After hearing all this from my broker's associate and reading up for a few hours I'm not sure if I'm getting the right advice or have the right goal in mind and I'm wondering if there is a better plan/strategy that I can put in place. Maybe I could get an IP in Brissy or GC without the need to have it close to Sydney as a backup home. Maybe I need another broker (currently it's Aussie), maybe I need to talk to a financial adviser, I've heard that they are expensive and I don't think my finances are complicated enough to warrant one but what's the rough cost? I'm thinking of speaking to a financial adviser because there are many next moves that I can make that are specific to me, one example would be that I could ask for my brother's help financially and help him get into the market. Your thoughts would be much appreciated.
The strategy sounds good - buy a place you want to live in eventually and rent it out for a while. Sounds like your borrowing capacity is short by $100k approx. That means you will need more cash as if you increase any loans the borrowing cap will reduce by a corresponding amount - roughly. Which bank did the broker refer to? Some are better than others with servicing. And there are a few tricks to increasing borrrowing cap so best to see another broker and get a second opinion.
Hi @Sabor Welcome to PC. Good to see you have clarity on what you are after in terms of your next purchase. Understand that you can afford the repayments for the IP based on your income and outgoings. Banks assess on a higher rate based on what is on offer, just to ensure that should rates rise, you will be able to afford the repayments. Banks also override living expenses, where your living expenses are deemed to be too low. Depending on what cash savings you have, there may be other options available to you. In terms of where to buy - purchasing on the Coast (Central Coast?), what sort of returns are you getting? Where is the market at in terms of the property cycle? Buying up the coast does sound like a lifestyle decision, more than an investment decision. At that price point, there are definitely some good quality properties available in Brisbane - depending on where you buy.
Thanks for the reply Terry_w the broker pointed me in the direction of Adelaide Bank, HSBC and Suncorp. Like I said in my post this wasn't my normal broker but his associate and I don't think he put that much effort into it since I'm not his client and it was 6pm on a Friday. I will talk to my usual broker about it and will also chat with another broker for a second opinion. I do think I want to get the ball rolling so if I'm okay to borrow the 350K with no LMI I might have to change my strategy and buy an actual IP. I've found some that I'm interested in around the Gold Coast at that price point, with a potential rental return of up to $400 p.w.
Thanks for the warm welcome @Property Twins I have 20K in redraw but that is my emergency money and wouldn't feel comfortable investing it. While I'm not aiming to build a large property portfolio, my humble goal of buying a place where I would want to retire to and rent it out in the mean time might need to change. If I can secure 350K to invest using my equity I might just buy an IP as close as possible to Brisbane CBD or Surfers Paridise. I'm not sure if I calculate returns correctly but I think I would be getting 4.5 - 5% I agree it wouldn't be much of a cash cow in terms of financial investment but it is more of a personal investment into my future retirement plans, but you never know I might go somewhere spectacular in this beautiful country of ours and want to retire there instead. I think the Central Coast market is at the top of the property cycle that's why I might change strategies and target Brissy or GC and become a property investment tycoon!!! I'll probably book a discovery session with you for that second opinion.
