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Refinancing Help Please

Discussion in 'Property Finance' started by Will Boy, 3rd Sep, 2016.

  1. Will Boy

    Will Boy Member

    Joined:
    18th Jun, 2016
    Posts:
    6
    Location:
    Sydney
    Hi All.

    I'm looking to purchase a 2nd I.P and having a little trouble acquiring finance.

    Brief overview is that we are self employed living in PPOR with $440 000 owing paying P and I (est value $820 000). We have one I.P in Sydney, paying I.O, owing $270 000 (est value $650 000). Interest rate on these loans is 3.92%.

    Serviceability appears to be an issue with CBA as we have a relatively low combined income of $91 000. Our business has been established for over 3 years.

    CBA will lend us $400 000, although this is roughly $150 000 short of what we are budgeting for our next purchase. I understand lending criteria has tightened for investors.

    CBA suggested we can borrow $150 000 as a deposit loan, and go to a broker for the remainder. He mentioned that we may pay a premium interest rate on the $400K.

    Q1. Can anyone suggest a better strategy?
    Q2. Will I generally pay a higher interest rate when acquiring finance through a broker?
    Q3. Any suggestions for other lenders with more favourable lending criteria?

    Thanks for reading and look forward to your responses! Apologise in advance if this has been covered previously.
     
  2. Jerry O

    Jerry O Well-Known Member Premium Member

    Joined:
    21st Jun, 2015
    Posts:
    362
    Location:
    NSW / Melbourne
    Hey Will Boy!

    Welcome!

    Q1: Speak to a broker and run your situation pass them. If you are struggling to get finance with CBA, there are still a lot of options out there in terms of lenders. Given that you have been running the business for more than 24 months (which is what most lenders will accept when you are self employed) then you should be alright in terms of lender selection. The next issue is the combined income of $91k, that is relatively low for a combined income but that is not to say it should limit you there. Lenders also take in 80% of the rental into consideration.

    Q2: You will pay the same interest rate if you go through a broker and walk in to a branch if not better. Brokers can negotiate a better interest rates for you but this will be dependent on the strength of the deal.

    Q3: Do a quick search here in the forums, there has been a lot of discussion in terms of alternative lenders when you hit serviceability issue with one lender.

    Hope that helps!

    Cheers,
    Jerry
     
  3. House

    House Well-Known Member Premium Member

    Joined:
    13th Sep, 2015
    Posts:
    773
    Location:
    Sydney
     
  4. Will Boy

    Will Boy Member

    Joined:
    18th Jun, 2016
    Posts:
    6
    Location:
    Sydney
    Copy that. Thanks for the advice Jerry, appreciate the response.
     
  5. Will Boy

    Will Boy Member

    Joined:
    18th Jun, 2016
    Posts:
    6
    Location:
    Sydney
    Thanks House!
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    Hey Will,
    Definitely see a broker, they'll be able to help you and also make sure you get a decent rate for all your lending. It's not unusual to get the deposit from one lender and do the purchase with another - it can actually work out well that way.

    One thing you might consider is putting your PPOR on IO for a year or so - this can also help with servicing for the new IP with the more generous lenders.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,173
    Location:
    Gold Coast
    Unusual for a banker to "expose" their employer in such a way though

    ta
    rolf
     
    Corey Batt, Jess Peletier and York like this.