Loads of equity, no loan serviceability. What are the options?

Discussion in 'Financial Planning' started by Tigerstripes, 19th Dec, 2019.

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  1. Tigerstripes

    Tigerstripes New Member

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    Hi everyone. Apologies if this is in the wrong section, wasn't sure where else to put it.

    I'm in an unusual situation where I own my PPOR outright (valued at upwards of $1.2m) and as such have a lot of equity which I would like to unlock and put into rental investments.

    However, due to current circumstances, I have almost no income to speak of so obviously can't access any of it.

    My partner has a steady income and serviceability, but she is very risk averse and not interested. Approaching friends or family to act as guarantor (or get on board otherwise) isn't happening either.

    The only options that I can see are:
    • Move out and rent my place out. However, my partner doesn't want to move. Also after expenses (renting new place etc) I doubt it will provide enough income to be able to draw that much equity anyway.
    • Sell the property and use the leftover funds to invest. This would be a bad idea for a number of reasons.
    I'm wondering if there is such thing as a "guarantor investor" service out there, or something similar. So where the investor would guarantee serviceability (obviously the goal is for the rentals to pay for themselves though) and bridge any payment gaps for now, in order to later receive a worthwhile dividend for their efforts.

    Has anyone heard of anything like this or have any other ideas on what I can do otherwise?
     
  2. Terry_w

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

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    lenders generally will not take guarantees from non-spouses

    If you move out an rent this won't help if your only income is the rent.

    You could use a company purchaser to get around the NCCP act. But many legal issues to consider.

    Joint purchase with someone else an option, and/or structuring with a trust or company.
     
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  3. Ace in the Hole

    Ace in the Hole Well-Known Member

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    Sounds like your partner is severely restricting your options for financial success.
    There could be a 3rd and 4th option:
    • Find a new partner compatible with goals.
    • Or, get yourself some income, but the partner issue may arise again further down the track.
     
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  4. Trainee

    Trainee Well-Known Member

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    Op, what is the reason why you cant get income?
     
  5. geoffw

    geoffw Moderator Staff Member

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    Is it possible to Airbnb a spare room or two? If you're not earning income, perhaps you have the time to manage this?
     
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  6. Tigerstripes

    Tigerstripes New Member

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    Thanks Terry.

    Oddly enough, the joint purchase option - which seems blindingly obvious now - came up in a chat I had with a mortgage broker just yesterday. As silly as it sounds, this option had never occurred to me prior to this for some reason, but then again, I'm no expert.

    It's another avenue for me to explore though.

    As for trust structures - yes, I would go with these on the IPs anyway for asset protection & tax benefits, so I'm with you there.
     
  7. Tigerstripes

    Tigerstripes New Member

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    I get why you're asking, but It's a long story that I'm not interested in getting into on here. If it was something I could rectify easily, then I wouldn't be posting this.

    FYI - It's not that I have no income, but the minimal stream I am currently left with is negligible when we're talking about servicing a loan.

    Thanks for taking an interest though.
     
  8. Terry_w

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

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    Just make sure you get legal advice. You wouldn't want to jointly purchase with the wrong person or set up trusts without planning
     
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  9. Tigerstripes

    Tigerstripes New Member

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    That's a good suggestion for spare cash, but it's still not going to get me any closer to unlocking my equity.

    It's such a frustrating scenario!
     
  10. Lindsay_W

    Lindsay_W Well-Known Member

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    Unfortunately unless you can show income for servicing you won't be able to access the equity. Long gone are the days where you could have a non-related servicing guarantor for your loan.
     
  11. geoffw

    geoffw Moderator Staff Member

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    Hence my suggestion for Airbnb.
     
  12. Lindsay_W

    Lindsay_W Well-Known Member

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    Good Suggestion but how much would you expect the OP to make from Air Bnb? Enough to borrow? Lots of lenders won't even consider if it's the only income stream either but it would put some cash in the pocket.