Serviceability issues

Hi PC,

Recently finished renovations on PPOR and have $400k+ of equity (value $1.2m).

I was now hoping to get into my next project to build a property portfolio. Ideally a dual occ develop to hold in Adelaide (home town) or Brisbane.

I was a disappointed when my broker said we could only borrow $400k for the next property due to serviceability as LVR was no problem. My analysis includes spending up to $650k on the block.

Our income is good with plenty of surplus but the broker said it was because how our mortgage is assessed, which is going to be eased in the near future.

Is there anything that can be done to improve serviceability as I’d like to purchase before Xmas if the right property comes up.

Or do I need to starting looking for blocks at $400k and revisit my projections?

Much appreciated.

 

Have you got any CC's? They can hit you hard. BTW if you want dual occ, avoid Brisbane. Very hard.

 

It's a very common problem. There's really only two ways to improve serviceability. Eliminate debt or increase income.

Pay off and close any personal debt or credit cards.

Are you or your partner in a position to increase your income at all?

 

Thanks Jaybean.

Only one $5k credit card but can look at cancelling.

Interested in why you say Brisbane in hard? I would be using the service of a buyers agent with development experience.

 

No real chance in increasing income anytime soon Peter.

 

Hi Rolf - we haven't even got to that yet as we are trying to buy the property for subdivision first.

 

There are over 300 ways to increase serviceability. Best to seek specific credit advice from a broker

 

$5k won't make much of a difference don't worry.

Brisbane City Council is super strict with granny flats / dual occ. Have a look around this forum, particularly threads from Darryl from RPI.

 

Try Pepper. Try Liberty . Otherwise, you need to pay down debt or increase your income or both.

 

Can you please list your top 100 ways to increase serviceability ?

 

no way, but I have listed a few on here before.

Legal Tip 91: Structuring a Trust to Maximise Borrowing Capacity Legal Tip 91: Structuring a Trust to Maximise Borrowing Capacity

10 Strategies to help you buy a property when you cannot service 10 Strategies to help you buy a property when you cannot service

Trust Strategies to Increase Borrowing Capacity Trust Strategies to Increase Borrowing Capacity

 

It was worth a shot haha. Thank you. I’m a big fan of your content!

 

1. Increase income.
2. Reduce debt.

There's a few things you can get creative with, but they're not reliable.

 

What are the creative things? Do you think getting a part time job will help increase serviceability? How long do you need to hold a second job for the bank to accept it?
Cheers

 

Different lenders define income differently, and debt differently too. So you have to work a way to maximise the income they will take into account for serviceability and minimise the debt they will take into account.

 

Do you have room for new clients Terry?

 

Now, I am only giving legal and tax advice to people who use my company Loan Structuring Pty Ltd as their mortgage broker.