No job but own PPOR house outright - will lenders fund a home loan?

I own a house outright but not working at present, so wondering if lenders will fund a home loan? Wanting to buy home for my elderly parents. Home would be approx. 25% value of my current home's value. Naturally, I'll speak to a finance broker further, but wondering if this is feasible in today's financial climate?

 

Unfortunately, regardless of capital position you'll need to demonstrate how you can service/repay the debt via income.

 

How will you afford the repayments?

Unfortuantely most loans are qualified on income & cash flow. Your equity position only relates to how much security there is available for the bank.

 

Nope, responsible lending laws and all that.
Banks want to see you've got capacity to repay the debt and have enough money to cover cost of living.

Private Lending is an option at that LVR, high risk though, eg. can take your house if the debt isn't repaid in time.
Rates are high, terms are short (1 or 2 years) plus how would you plan to repay the debt?

 

I thought I may be able to use equity to fund the repayments in the short term/1 year before I return to work, but this seems unlikely, so it's either sell the home or go back to work.

 

I thought I may be able to use equity to fund the repayments in the short term/1 year before I return to work, but this seems unlikely, so it's either sell the home or go back to work.

 

Problem is using equity to fund repayments is unsustainable. Eventually the equity runs out. There's no guarantee that you'd return to work or that the employment would be enough to qualify for the loan. Far to many unknowns.

When things go bad you've got the borrower in A Current Affair crying that the bank gave them a loan that they didn't have enough income to pay back.

It was this sort of lending that led to the GFC overseas, led to credit regulation in 2011, APRA crackdowns from 2015-2020 and played a part in the 2019 Banking Royal Commission. Fun times.

The good news is that there are lenders that might be able to help once you've been in a permanent possition for only three months.

 

Thanks for the insight, appreciated

 

Even though equity isn't a problem, what the banks want to see is your ability to repay with income.

 

No job. No income stream NO finance