increasing income through investments

Discussion in 'Loans & Mortgage Brokers' started by D&J, 21st Feb, 2019.

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  1. D&J

    D&J Well-Known Member

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    Hi everyone

    I've hit the servicing wall from the banks perspective :s

    However have significant cash savings in offset, so was wondering whether it would be worth investing in income generating assets in order to improve my serviceability.

    If I went down this path:
    1. Is it possible to estimate what each $1 invested will roughly generate servicing wise?
    2. How is this stuff assessed by the banks, for e.g:
    - if I was looking to purchase a property in the next 3 months, is it too late to set something up now?
    - how long will it need to be locked up for for the bank to be comfortable with using this

    I'll try and reach out to a broker tomorrow but thought it would be good to get some early answers if possible to help with the thought process etc

    Thanks!
     
  2. Propertunity

    Propertunity Well-Known Member

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    Before the BRC most lenders wanted 2 years worth of successful trading to have it included in serviceability.
     
  3. mikey7

    mikey7 Well-Known Member

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    Pay off a loan with this significant amount of cash and re-borrow for another investment?
     
  4. Terry_w

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

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    Or lend to a related entity to purchase and claim the extra interest yourself.
     
    willair likes this.
  5. Nuncasuficiente

    Nuncasuficiente Well-Known Member

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  6. Nuncasuficiente

    Nuncasuficiente Well-Known Member

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    I believe based on long term past performance you can expect around 6-7.5% averaged income inc dividends from a quality index fund like VAS.

    But I the banks will probably just view your holding as an asset not an income.
     
    Terry_w likes this.
  7. FXD

    FXD Well-Known Member

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    In the current lending environment, will it be possible to borrow dollar for dollar for the old loan
    paid off vs the new one?

    Thanks,
    FXD
     
  8. Terry_w

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

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    Yes using redraw
    Prob no if paying off a loan, discharging mortgage and reapplying.
     
  9. Redom

    Redom Mortgage Broker Business Plus Member

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    Depends on the bank, but most want investment income from sources like shares/etc to be verified with a couple tax returns. I.e. it's hard to translate offset cash into useable investment income for property loans quickly. You could buy a 6% yielding property asset & that income can be included post settlement, but you can't buy a 6% yielding stock and have that income included quickly.

    Some larger banks use deeming rates based on asset size (which can be used), but most will apply above policy treatment.