Refinancing with unstable income stream

Hi all,

I currently have a $400k mortgage on a Sydney apartment at a ~55% LVR (property value $750k) that is an investment property and currently rented out. Currently I am paying a much higher rate than I would like as when I got the loan I had very little other income and hence only had one lender to go with.

I now want to live in the apartment as an owner occupier and refinance my >5% interest rate down to <4%. The problem with this currently is that instead of getting a job, I have co-founded a consulting/services business instead (have been in business only a month so far). This initial time has been spent on setup and the long sales process with clients, so earnings will likely be delayed for the next month or two and will take time to ramp up after that. In a few months we will probably start paying ourselves a base salary of ~$60-80k and then take dividends as cash flow warrants. Another option I have is to take contract work at my market rate of $600 a day temporarily (3-6 months) to boost my cash buffer (currently sitting at ~$25k). Given my low cost of living (~$10-15k p.a. + mortgage and housing expenses) a 3 month contract covers my cost of living for a year.

In case it matters, the business I co-founded is a unit trust, with half the units held by a unit trust of which I am the sole beneficiary. Corporate trustees are used for both trusts.

My questions are:
1. If I only get paid the salary from the business (e.g. $80k a year), how much pay history would I need to show to refinance? Does the age of the business and the fact that I half control the business alter this?
2. If I were to take the temporary contract work option, how much work history would I need before going for the refinance?

I just want to get my home loan on a much more reasonable rate and focus on building the business. I know that if funds get low I have marketable skills to fall back on, however something tells me the banks won't take my word for it.

 

who's your current lender?
tell them you'll be moving into it and maybe they'll give you the owner occupied rate.

 

Avoid the refi for the moment - contact your current lender and ask for a better deal sighting competitor offers. Depending on the lender - you might get a lower rate over the phone.

Otherwise - you'll need to wait a year or two since you're now self employed.

Cheers

Jamie

 

1. 2 years
2. 2 years

Go with Jamie's suggestion

 

Once you move in you should be able to transfer with your current lender to owner occ rates which will be lower.

Refi is not an option without some sort of income / tax figures behind you. 1 years at the very least. And not to have a go at you (I admire your confidence) but I do find it a bit amusing that you would consider yourself "bankable" at the present with no income in the door yet. Can you take it to the bank as they say.

 

Thanks for the responses, much appreciated. I was hoping it would be sooner than 2 years, however I might just have to suck it up for a while. My concern with going back to my current lender (NAB) and asking for a better deal is that I don't have other options at the moment, doubly so if I plan on moving in and forgoing the rental income. Maybe I'm paranoid, but I might wait a few months until I am in a better position before doing that.

@Marty McDonald, no offence taken. I'm confident about the business but not foolishly so. By "bankable" I refer to my position as a whole (rather than just that of the new business), as there is a lot of decent paying work available for my skillset as an employee / contractor. However, I would prefer to focus on the business, with those jobs being a part time fallback if I end up needing the money.