Can any mortgage brokers help me?

Discussion in 'Loans & Mortgage Brokers' started by Ed C, 8th Mar, 2018.

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  1. Ed C

    Ed C New Member

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    Hi guys

    First post ever on the forum.

    I've been a ''lazy'' investor for a while now. I've got two investment properties. One in my name. One in a joint name. Both are negatively geared but very close to neutral now I have equity available in both. Maybe 250k-300k.

    Problem is I'm on a low income of 50k and one of my broker's I engaged with told me I won't be able to buy anymore on this income. So I can't expand anymore even though I have deposit and equity available and I budget my lifestyle quite strictly.

    For my third purchase I was about to purchase a positive cash flow property that is projected to give me an extra 100pw, or on the lower side 90pw, to my overall income.

    I have read some posts about low income earners trying to build a property portfolio and apparently these days are over.

    Can someone prove me otherwise? I'm very keen to get a different view to what my other broker told me about my situation.

    I'd be keen to talk to a finance broker 1 on 1 if you think I can do better.

    Cheers
    Ed
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Unfortunately this is a conversation we have a lot with clients. They want to borrow more, but they simply don't have the borrowing capacity according to the lenders criteria.

    A second opinion may be useful. It is possible that your broker made a mistake or there's something they didn't consider, but from what you've indicated, I wouldn't anticipate a different result.

    People's perception of borrowing capacity is around things like positive or negative cash flow and it's usually based on their current interest rates and repayments. Lenders criteria is quite different as it assumes significantly higher interest rates and repayment criteria. Their assumptions of repayments on your existing debts are probably going to be about double what they actually are.

    Basically an extra $100 per week doesn't make a lot of difference to peoples borrowing capacity.

    With a low income there's probably not a lot that can be done, but myself or another broker are probably happy to take a look at it and give a second opinion.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Plenty of decent brokers on here that Operate out of Melbourne

    I think with the changing times u might not b able to do a whole lot in terms of acquiring more stock.

    Having said that if you have sufficient equity most people in your position can still get a loan r two although they would necessarily be from a non-bank third tier lender will which may not be ideal both in terms of interest rate and other associated risks.

    Many of my clients are in exactly the same position as you are and are having to look at alternative methods to generate either cash flow and/or equity growth into the future.

    ta
    rolf
     
  4. Ed C

    Ed C New Member

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    Theoretically speaking, as a low income earner, it would be best to now acquire positive cash flow positive properties to balance the portfolio out. For example if the banks won't allow me to borrow but I have equity/cash ready to buy a property outright without a loan. Thus this property would be debt free and giving me 100% of the cashflow and 0% to principle and interest.

    Would the banks see this debt free cashflow as income in addition to my normal working income?

    Reason I ask this is because I'm confident I can buy at least one or two fully paid off and these very same properties I was about to purchase with the intent to borrow from banks was going to be 10% gross rental yield return. So if the banks still won't lend for these deals then I'm in position to buy at least one debt free.

    I guess this would boost my cashflow income higher but I would not have any more leverage to buy anytime soon on more growth assets or more positive cashflow properties.

    I guess my individual financial situation needs to be closely looked at first before we go further?

    Ed
     
  5. Eric Wu

    Eric Wu Well-Known Member Business Member

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    the question is where will get the large sum of cash to purchase next one or two properties, equity from existing portfolio may not work, because from what you described above, you may not be able release these equity ( due to current income, maybe).
     
  6. Ed C

    Ed C New Member

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    If this cash is in the form of proceeds of sale as a result from subdivision, would this work? Also keeping the front and I checked recent markwts. LVR is still under 80%.

    Thus no increase or movement on interest payments alone.

    I'd really want to explore this option because what if it does help?? Even a little??

    Actually I want to explore all options available..even the smallest gaps to try and make this third property possible.

    Probably will finally give up if I'm told ''no you can't do it'' on the 10th time
     
    Peter_Tersteeg and Eric Wu like this.
  7. Eric Wu

    Eric Wu Well-Known Member Business Member

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    I like your persistence, :)