DTI vs Serviceability

Discussion in 'Loans & Mortgage Brokers' started by Hari Yellina, 27th Aug, 2020.

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  1. Hari Yellina

    Hari Yellina Well-Known Member

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    Macquarie sent me a variation letter after one day of settlement.

    The construction loan interest is decreased to 2.99%
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Great news @Hari Yellina :)

    From what you're saying, you've managed to fall within Macquarie's standard residential policy. They do have another level where they can go way beyond standard servicing models. The trick to getting into that line of banking is good structuring and low LVRs.
     
  3. Hari Yellina

    Hari Yellina Well-Known Member

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    I want to be in that space. and make my life easier.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    A couple of things to help in that space:

    * Little to no debt in your own name. Invest through trusts.
    * Very conservative LVRs.
     
  5. Hari Yellina

    Hari Yellina Well-Known Member

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    I got lot of properties and debt in my name. made some mistakes.
     
  6. Jamesaurus

    Jamesaurus Well-Known Member

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    Just confirming is this just for High Net Worth clients that mqg will look at a deal on its own merits of potential rental income vs the purchase price if you have 20 deposit/80%lvr ?
     
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  7. Hari Yellina

    Hari Yellina Well-Known Member

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    Yes
     
  8. Lindsay_W

    Lindsay_W Well-Known Member

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    No need to be a high net worth client, most lenders who offer construction will take the
    as-if-complete value and potential rental income to be used towards servicing.

    If you are just buying the existing property and not applying for construction loan as yet then they will only accept the current rental income value and will not allow you to nominate a 'potential rental value' for serviceability purposes UNTIL you're applying for the construction funds.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Probably not. Best I can determine from the posts here, Hari has fallen under Macquarie's standard residential policies.

    I suspect the difference between what Hari has done and what most people do is in the structuring of the ownership of the properties. Macquarie has a few loopholes that can work to your advantage when it's done well.
     
  10. Hari Yellina

    Hari Yellina Well-Known Member

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    Peter is right. experience brokers can get the best for the client.

    I am buying properties in different types of structures.

    Like anyone else. I will have my personal and company tax returns and financials. every single document is verified.

    My company trading history, my rentals, my personal income, they are very good. So, the bank will assess me a little differently.

    No bank is bending the rules. they can assess me differently.
     
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  11. Elives

    Elives Well-Known Member

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    how does this help borrowing capacity? etc buy and hold via trust is like double land tax in most states
     
  12. Terry_w

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

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    Legal Tip 91: Structuring a Trust to Maximise Borrowing Capacity Legal Tip 91: Structuring a Trust to Maximise Borrowing Capacity

    Loan Tip: Discretionary Trust income and Serviceability Loan Tip: Discretionary Trust income and Serviceability

    Trust Strategies to Increase Borrowing Capacity Trust Strategies to Increase Borrowing Capacity

    I don't think your comment about land tax is correct!
     
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  13. Elives

    Elives Well-Known Member

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    there are surcharges which are applied if you hold land in a trust? compared to personal vic is like double land tax. unless i'm mistaken
     
  14. Terry_w

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

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    This varies from state to state. In VIC for instance it could even still work out cheaper to hold land in a trust than your own right, in terms of land tax.
     
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  15. Elives

    Elives Well-Known Member

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    how is that when they are applying a surcharge for trusts?

    1mil land personal is about 2,975 p.a
    1mil land trust is $6438 p.a

    more then double the amount?
     
  16. Terry_w

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

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    a trust gets a separate threshold to an individual. What about for other amounts? What if the person had $2mil of land held already?
     
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  17. Elives

    Elives Well-Known Member

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    "We assess each trust that a trustee acts for separately and send them our assessment. If you are the trustee of multiple trusts, you will receive a separate assessment for each trust unless the trusts have the same beneficiaries."

    just read on vic site, does that mean you could have a different threshold per trust if you had a different trust/company as the sole beneficiary of every trust and that way each trust has it's own threshold?
     
  18. Trainee

    Trainee Well-Known Member

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    At some point, the limitations cost more than the benefits.
     
  19. Terry_w

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

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    If there was a sole beneficiary it would be a bare trust and the beneficiary would be assessed. Separate trusts could be assessed separately though
     
  20. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    There are a small group of lenders that will assess what is in your name and what is in the trust holding the security property. The can ignore any thing in other trusts. This gives you a strategy to significantly improve your borrowing capacity.

    The extra land tax and other costs is the price you pay to exploit this borrowing power loophole. As a result it's not a strategy that will suit everyone.
     
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