Serviceability affected by existing loan on joint ownership

Discussion in 'Loans & Mortgage Brokers' started by ADK, 8th Feb, 2023.

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  1. ADK

    ADK Active Member

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    Hi! Not entirely sure how to describe this situation. So i have an IO under joint ownership with my husband. Now, I want to buy an IO solely on my name. The problem is that when lender assesses my serviceability, they consider 100% of the loan of the joint property, only 50% of the rental income for the joint property, and also 100 % of the living expenses. This is significantly affecting the serviceability when in fact living expenses are shared, the interest on the loan is also shared (as it's joint). Is this a bank policy or an APRA policy? Are there lenders who are more practical and less conservative in their calculation of such a scenario? Thanks!
     
  2. Kinko

    Kinko Active Member

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    There are banks with a lending policy called 'common debt reduce' which is the solution you're looking for. Under this policy, the bank would consider only taking 50% of the joint loan rather than taking 100% of the joint loan which affects your serviceability.

    There's a variation to this policy where the bank will still take 100% of the joint loan but they will allow you to use 100% of the rental income.

    St George allows the first option - taking 50% of the joint loan and 50% of the rental income for your individual servicing calculations.

    I'm sure there are other lenders too so best to speak to a good broker on this forum so they can research the best option to maximise your borrowing capacity.
     
  3. ADK

    ADK Active Member

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    Thanks! I'm with westpac. Isn't St George under the same Westpac group?
     
  4. Kinko

    Kinko Active Member

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    St George is under the same group but they do differ in their lending policies though. I don't recall or have any knowledge of Westpac having this particular special policy though.
     
  5. Lindsay_W

    Lindsay_W Well-Known Member

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    There are alternative options yes, speak to a Broker to find out what you qualify for.
     
  6. Brady

    Brady Well-Known Member

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    I just posted in another thread
    CBA will look at this w/
    - Stat dec (both parties)
    - evidence
    That's for the debt/rent

    They also have policy for the living expenses also.
     
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Cba - alternative servicing
    STG - common debt reducers
    MAC Bank will consider it also.

    These are assuming all parties can service their portion of the debt + existing debts to be able to only use your portion of the debt in yoir calculations.
     
  8. ADK

    ADK Active Member

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    Thanks! This will hopefully give some relief.
     
  9. ADK

    ADK Active Member

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    Thanks! really appreciate you share this. Never heard of this policy.
     
  10. Lindsay_W

    Lindsay_W Well-Known Member

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    Wait aren't you the same person that posted this thread ?Bank closed LOC. Won't re-instate. What to do.

    I wouldn't be using any part of the Westpac group for future lending if you're lodging a complaint with AFCA currently.

    You really need to use the services of a Broker.
     
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  11. ADK

    ADK Active Member

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    Yes, i am. I'm stuck. I'm now trying to find an alternative solution in place of that LOC - to help ease my anguish over that matter. I will definitely look into engaging the service of a broker. My previous broker who helped set up my loan (with that LOC) has retired.
     
  12. The Y-man

    The Y-man Moderator Staff Member

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    Don't want to sound too blunt but.... what is there to anguish over about buying an IP?

    IMHO If you can't buy it, it's usually a good sign to say it's the wrong time.

    The Y-man
     
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