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 Exclusive Real Estate Buyers Agent Business 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 Plus 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 Plus 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 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.