Need advice on buying PPOR when borrowing power tied up in IPs

Discussion in 'Loans & Mortgage Brokers' started by amarshdoll, 21st May, 2019.

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  1. amarshdoll

    amarshdoll New Member

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    21st May, 2019
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    Sydney
    Keen to hear some pointers/advice from the experts on this forum so I can approach the right advisers.

    Between spouse and I, we have a couple of IPs. We did this as we were working out of state and overseas for some years. Now we want to buy a PPOR but our borrowing power is limited by our IP loans and isn't enough for what we want to buy.

    Yes we can sell off but wanted to make sure there isn't another way to structure our IPs so we are not constrained. I've been reading up on trusts but it seems that with the personal guarantee it's not going to make a difference.

    Thanks for the help. We're newbs so apologies in advance for my ignorance :)
     
  2. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    Level 2 287 Collins St Melbourne VIC 3000
    There are lots of potential strategies, put the loan on interest-only repayment and go with a lender like Pepper or Liberty which could give you a nice bump in borrowing power, but it will depend on how far off you are from the home you would be happy with.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    The biggest issue is that most lenders are going to assess that IP debt at a rate of circa 7.40% and P&I repayments.

    There's still some smaller non-bank lenders with reasonably generous methods of calculating max borrowing for those with multiple properties such as those mentioned above. There's pros and cons when it comes to using them - the rates/app fees are generally higher for instance.

    Cheers

    Jamie
     
  4. amarshdoll

    amarshdoll New Member

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    Location:
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    Yes we have 4 tenanted properties on 3 properties (one property has 2 units).

    1.5 loans is IO already.

    We are way off unless we sell 2 of them based on advice from one of the big banks. Even then we are 15% off our “ideal”.
     
  5. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    Location:
    Level 2 287 Collins St Melbourne VIC 3000
    Without knowing actual numbers it's very hard to tell, but I have had clients in the past been told no by their Big 4 Bank, and have been able to borrow $1m when we looked at other options.
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Might be worth sussing out non bank lender options if you're only 15% off on the basis of a Big 4's borrowing capacity calc.

    Cheers

    Jamie