How do banks view boarding and lodging

Will I be able to improve my borrowing power by "Boarding" with mum and dad. How significant will the borrowing power be. I don't know how the banks calculate board but I'd anticipate it would be significantly lower than the future rent I'd be getting. It isn't a problem when claiming future rent so is it here?

 

Update: I can't edit the post. I think the issue will be that I would have to change the current PPOR to an investment loan with the bank as the rates are different. I don't think it's a good idea.

 

How far in advance can I use future rent as income? Say I move into my house in August, due to rent February (6 Months). Could I get a loan in September using the future rent in February? I've thought about a scenario where I do that, have a rental in the other state, and move home with mum and dad briefly. All legit.

 

If you're moving into the property straight away then no rental income will be used towards borrowing capacity calcs as you're buying it as and Owner Occupied not investment. so the 'future rent' won't be able to be used at all until you actual move out of the property and convert to an investment.
Best to speak to a mortgage broker about the alternative scenarios and which one works best based on your individual circumstances, you might not even need the rental income for serviceability.

 

I'm in that stupid situation where I've got enough equity but banks, at least CBA and ANZ say no. They're so restrictive.

 

And I think I might have to get another broker. He seems basic at best. I've talked about my situation and all he tells me is I need to earn more. Hasn't offered any information about structuring and other advanced options.

 

The CBA and ANZ are probably the more generous mainstream lenders in terms of borrowing capacity. If you're tapped out with them, you're really going to end up with the non-conforming lenders. This might get you another property or two, but then you'll be at a dead end and you'll likely end up having to take a step backwards to move forwards in the future.

I'm not sure that boarding is the silver bullet you hope it will be. Lenders have a few policies in place that essentially means rental income doesn't add much to much in servicing calculations. Every penny helps, but the lenders that do accept boarding houses will likely assess it on the 'normal' rental market. You might improve your personal cash flow, but probably not your servicing.

As for 'advanced' structuring options, what are you thinking of? Ownership through trusts and business entities rarely solve servicing issues, usually the opposite. There is a very narrow path that might work, but it's very unreliable and if it doesn't work it could set people a long way back.

Sorry to be the bearer of bad news, but servicing is only a fraction of what it once was. Lender policies are very restrictive and I don't see significant improvements any time soon. Often the best way forward is to improve personal income (which I acknowledge can be very difficult).

 

Thanks for the advice and I get the restrictive nature of the banks. I was to the understanding that I could choose another provider that would use more of the rental income than 70%. I did consider smashing out another job for a few months to build my income but I don't want to put myself under unnecessary stress.

It's so frustrating given that in the late 90s and early 00s investors were racking up property after property, and then you see some bs article about how some guy made millions on the property market.

By August I'll own a positive cash flow investment property (200 Mortgage/300 Rent). By February, that will potentially be two (260 Mortgage/ 350 Rent). Even with 85K income CBA are being so restrictive. I did find a mistake on my recent loan application as she doubled my insurance costs.

So all I've got to work with is removing my 17k Hecs debt and reducing my expenses by 200/month which will set it at the minimum of about $1800.

I'll be moving interstate about April next year and do not want to sell my positive cash flow investments. Hence the desire to get a third property. I also don't want cash.

My number one goal is to spend time with my son, but I'd like to have a few properties to retire early on so I can travel around the country on the rent. Beyond that, I don't really care about a bigger port folio.

Would there be any benefit to renting when I move interstate initially and continue putting money away until I can buy another property?

 

Without knowing your full financial position it's hard to provide an definitive answer for you but it could be possible that may work in your favour, reducing debt where possible would help as well looking at alternative lenders to the big banks could also assist your borrowing capacity for future property purchases.