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can I continue to borrow more- anyone have some advice.

Discussion in 'Property Finance' started by Daniel Jurin, 5th Dec, 2015.

  1. Daniel Jurin

    Daniel Jurin Member

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    I recently tried to borrow more money for another property. I was even willing to buy a PPOR and rent out the current house we live in. CommBank did the numbers and said I had the equity but not the serviceability. I was keen to continue buying property to try and build my portfolio and therefore have some confidence that I could lower the hours I put into my paid job.

    Here are my numbers, anyone know a scenario or lender that could get me buying again. Is it just a matter of needing to have a higher paying job or getting more rent for me to borrow again?

    Current debt: 1.35 million on investment properties- (worth about 1.85 in total)
    460,000 owed on current PPOR (worth approx 64000) plus I have 270,000 in offset.

    Rent in total is 1,670 a week ( but could easily add $150-200 more because one house has a granny flat that is not rented yet)

    Our total income is about $145,000 combined and we have two kids and no credit cards.

    There is obviously the rent of our current house - $600 a week to add if we then purchased another PPOR-

    I am pretty sure I can pull another $60,000 equity out of the investment properties if needed.

    Am I dreaming that I can continue to borrow? Should I stop even thinking about it? Or is there a scenario that can get me there?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Best to speak to a broker so you can check serviceability across multiple lenders. Borrowing cap will depend on who earns what and who owns current proeprties and who is on the loans.

    Compared to your total debt your income is relatively low - almost $2mil in debt and $145k income so things are going to be tight.
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    There are other lenders to look into - NAB might do it, even with their new servicing changes they're still significantly better than CBA for people with existing debt.
     
  4. York

    York Finance Broker Business Member

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    You have said that your total income is $145000? I think you are referring to your PAYG income only for yourself and wife. There is another 86k in rent without the granny flat. Isn't there any particular reason why the granny flat isn't being rented? I would think this may assist things if servicability is tight. Also like @Jess Peletier has said sometimes it may look like you may not get the green light from one lender but others may be able to assist. Speak to your broker as @Terry_w has suggested. Just my thoughts.
     
  5. Redom

    Redom Mortgage Broker Business Member

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    More often than not, if all your lending is with one lender and your scenario has remained the same - you can continue borrowing by simply switching banks.

    Lenders calculate your borrowing power by calculating your net monthly income and deducting your net monthly expenses. You show a positive number and you pass servicing.

    Now for most PAYG you'll find the income number very similar amongst lenders, regardless of who you go to (generalising).

    However, the expense number is very different as banks calculate this differently to your actual day to day expenses.

    For someone with over $1million in debt, often the biggest differences between lender calculators is 'what expense figure do the banks input on this debt'. You may be paying $45000 a year, but some banks will calculate this at $90,000+. Noting this, its pretty difficult to borrow from these banks for investors with significant mortgage debt.

    However, other lenders, like NAB calculate this $45,000 number far more favourably, around the $57k mark. Just by switching lenders you may have reduced your expenses by $33k a year or nearly 3k a month!

    Hence, as part of growing a portfolio in a strategic manner, brokers navigate around these differences to extend your borrowing capacities as far as your goals want to take you.

    Lenders to check: NAB, Homeloans, Liberty (i suspect you'll pass with all three).

    Cheers,
    Redom
     
    Last edited: 5th Dec, 2015
  6. Mick C

    Mick C Well-Known Member

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    If your on interest only.
    Can take out the equity and service a bit more ( sub ~$600k) from the above, but you will need to start to use smaller lenders and the mortgage mangers.
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Simple solution is to spread your borrowings amongst more than one lender - that will improve your borrowing capaicty.

    Reducing IO terms on existing/new Cba can help a lot too.

    A decent broker should be able to help.

    Cheers

    Jamie
     
  8. Daniel Jurin

    Daniel Jurin Member

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    Thanks for your input. The granny flat is not rented just because it needs a little work to get it presentable and to be honest we use it on the odd occasion ourselves so that has made me take my time to repair stuff
     
  9. Daniel Jurin

    Daniel Jurin Member

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    Thanks very much for your input- very helpful
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    A common goal for people that invest :)

    How many hours a week is absorbed by your current job ?

    If you are doing a bunch of OT or penalty rates work, that many cloud CBAs view too ...............

    CBA used tobe one of the faves for clients with 2 or 2.5 jobs but they have become quite tough in the actual assessment v the policy


    ta

    rolf
     
  11. Daniel Jurin

    Daniel Jurin Member

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    I am a teacher, so I do lots of overtime but none of it counts- there are no penalty rates- just great holidays. I think I officially do 38hours a week
     
  12. charpj

    charpj Well-Known Member

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    Hi Daniel,

    Are you saying you received OT income but it's not being used for servicing? If so, perhaps look at Teachers Mutual Bank - matrix below for reference. They taking 100% of regular teaching overtime.
    Jeremy

    upload_2015-12-9_14-5-20.png
     
  13. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    I've read it as they are on a salary - so no extra pay for OT.

    For what it's worth, plenty of lenders take 100% of Overtime so generally it's easy to get this included in servicing.
     
  14. Daniel Jurin

    Daniel Jurin Member

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    Thanks for all the input on this thread. I ended up getting in touch with Liberty and I am able to borrow more with them. Being a "non-bank" it seems Like they don't have to implement some of the recent tough regulations for lending. Does anyone have any feedback about Liberty? Are they okay?
     
  15. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Have you spoken to a broker yet? Liberty have their place but there may be other lenders that will be better for you. You may find that some simple restructuring could increase your capacity with other lenders that aren't quite so 'niche' and ultimately allow you to buy more longer term.
     
  16. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    As has been suggestion, chat to a broker @Daniel. They'll be able to help determine where you can go from here.

    Nothing wrong with Liberty but it probably makes sense to leave them until you've exhausted your other options as you probably won't have anywhere else to turn if your next deal is with them.

    It's always good to have options. :)