Joint loans and borrowing capacity

Hello everyone,

I currently have joint IPs with my sister owing total $500k (recently purchased). I'm looking to buy my own IP in the next 3 years and have some questions.

1. Will the bank consider me having $250k or $500k in debt?
2. Will the bank consider my rental income 50% or 100% of the amount?

This could affect my serviceability and I am hearing different information. I plan to get the loan at a big 4 bank.

Thank you for your help

 

Would also like to add that the rental income is greater than the loan repayments. Thank you

 

1. $500k
2. 50%

There are some lenders that may take your share of the debt though. If you own 50% of the property this would then be $250k.

Best to use a broker

 

Thank you. Are you aware of which of the big 4 take my share (50%) as consideration?

 

from memory - none of the big 4.

 

Something else you may not have considered is that lenders will be reluctant to let you access the equity in the property you own jointly. To access equity your sister would need to sign off on the equity loan. They'd ask what the benefit to her is. As there is no benefit to her, they may not want to fund the equity loan.

 

Bad Idea
Use a broker

 

1. Most will take into account $500k - but some have specific policies whereby they'll only assign the $250k. STG's common debt reducer comes to mind.

2. 50%

Cheers

Jamie

 

What you're after is a common debt reducer loan.

I believe St George and AMP are good in the market.

If your loans with cba then they would also consider it