Is this achievable and how?

Discussion in 'Loans & Mortgage Brokers' started by darrelj, 3rd Sep, 2022.

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  1. darrelj

    darrelj Well-Known Member

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    This is posted for a friend .
    My friend has utilised all his borrowing capacity for an off the plan house and property in Brisbane. This is due to be completed in April 2023. This will be the one and only property he will own soon.
    Meanwhile, his mum (not an Australian resident) is willing to give him $100,000 in cash for an investment property that is worth $175,000. Is my friend able to borrow the deficit of 75k? Or is there any other advice from our community here. Much appreciated.
     
  2. Trainee

    Trainee Well-Known Member

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    Your friend might be better off keeping that 100k in reserve in case the val on that otp thing comes in low and/or his borrowing capacity drops over the next 6 months and/or the build is delayed.
     
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not enough data........................

    Loan to value ratio wise sure < 50 % lvr if its a suitable security

    Borrowing capacity wise no idea, its likely a non bank may lend, though the loan amount may be too small.

    ta
    rolf
     
  4. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    He may or may not...

    The 75k deficit may be covered with the rental income. But there's so much more info needed.
     
  5. Lindsay_W

    Lindsay_W Well-Known Member

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    Tell your friend to speak to a mortgage broker to run the numbers for them based on real data. Without knowing income, expenses debts etc we can't say if they can or can't afford to borrow further funds.

    Have to ask though, what kind of property are they buying for $175k?
    Is it really the best use for the $100k?
     
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  6. darrelj

    darrelj Well-Known Member

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    its a one bed room apartment in the Brisbane CBD
     
  7. Trainee

    Trainee Well-Known Member

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    and thats a good idea because….?

    highrise? Lots of ‘amenities’? High body corp? Unlimited future supply? Postcode blacklist for 4000?
     
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  8. Burramys

    Burramys Well-Known Member

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    There's excellent advice above.

    OTP and high rise are not good combinations. The quality of the finish and perhaps even the layout are uncertain. I read about a developer changing the layout and size, with no remedies for the buyer. The OC fees may be horrendous - think of cladding (hopefully no longer an issue), replacing all the windows due to a fault, a major lift upgrade, etc. A lot of OTP places are the same, just another box.

    I always buy older places, no lifts, minimal things to go wrong. A relatively minor reno (sometimes a total reno) can add a lot of value and increase the rent or amenity.

    Yesterday I read that the price of building ingredients is finally going down. Buying OTP now - or building for that matter - may be at the peak of building costs.

    Keeping a significant amount of cash for a few years for unexpected OC costs is advised. Or sell the OTP place,
     
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  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Being an OTP, and assuming its High Density, I would defo keep my powder dry until settlement.

    ta

    rolf'
     
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  10. Sackie

    Sackie Well-Known Member

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    If it's not too late, from an investment POV I'd bail on it asap.
     
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  11. David Han

    David Han Mortgage Lending Specialist Business Member

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    Will need to do borrowing capacity calculations to see if he can service the $75k additional loan with the additional rental income on the IP.

    Risk to consider is as rates rise, your borrowing capacity will be reduced. You don't want to be in a situation where you purchase this IP and then you don't have enough borrowing capacity to purchase the Off-the-plan due in April 2023.