Loan near retirement

My parents are looking to downsize. Unfortunately their existing home while bigger, due to location will not sell for the price they need to buy a smaller house in a more desireable/convenient location. They need a loan of 500k to 750k to help buy something in a nice location of Sydney.

They are fully offset for 3 properties (PPOR + 2IPs). The 2 IPs are positively geared and they are not looking to sell them, for income. They are both near retirement ages and considering this in next 6 months to 3 years (though no firm plans yet) - depending on work from home situations. Both have reasonable guaranteed pensions post retirement (~130k/yr combined + 40k/yr rental income).

What is the best way to maximise their borrowing capacity? Can we draw equity from the existing PPOR (which will be sold)/other IPs (not being sold)? Would we have better luck trying to borrow as an IP for this new purchase? We have tried speaking to a broker but given their age and proximity to retirement, they do not seem too interested.

Any advice would be great.

Thanks in advance.

 

There is a few factors to consider

- borrowing capacity
- exit strategy
- LVR

A few lenders will probably not be interested due to their age, but some well if it makes sense.

 

If they are fully offset for the 3 properties, cant they use the offset to buy their new PPR with the old one sold? or use 1 of the IP as their PPR?

 

The PPR offset is negligible. They can move the offset from IPs across but even with PPR and offset savings (with an emergency fund reserve) it is limited money for a house in Sydney's inner west.

Living in IP is not feasible as they are out of state.

LVR will be < 50% once the funds from the existing PPR are released; <80% before the existing PPR is sold.

 

substitution of security?
Super income for serviceability?

 

Lenders are pretty tough on a exit strategy these days. They see Mum and Dad having health issues, one dying or all sorts of issues.
Definately a area where brokers can assist more than any specific lender. Mum and Dads own bank may well reject it. The offsets will pose some concern as its not a exit strategy. Its debt stalling. Debt recycle may or may not be a option.
Proposed sale of property is often also refused. Come back after it has sold and settled is a common comment.

 

What is the value of the IPs vs the loan they need for their new home? And how close to their mortgage repayments do the net rentals come on at? I've done a few loans where the loan term ends at 85 or 90 years old based on their strong IP position