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Serviceabilty: What did you do when you hit the serviceability wall?

Discussion in 'General Property Chat' started by Andrew H, 19th Jul, 2016.

?

Have you hit the serviceability wall?

  1. Yes

    13 vote(s)
    36.1%
  2. No

    19 vote(s)
    52.8%
  3. Yes, and have overcome and continued to grow my Portfolio

    4 vote(s)
    11.1%
  1. Andrew H

    Andrew H Well-Known Member

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    Cairns, QLD
    I want to get peoples ideas, strategies and general comments on what they did when they hit the serviceabilty wall to keep growing to their portfolio??? This includes actions they took in order to keep moving forward with their financial goals.
    I like many are nearing, if not already have hit the serviceabilty wall and given APRA's stance on things looks like this will be a very common problem for many people looking to grow their portfolio who are motivated to do so. Most of us understand, reduce debt, increase cashflow but what specifically did you do?
     
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  2. rhinsor

    rhinsor Well-Known Member

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    Perth
    I moved lenders as their serviceability wasn't for me.
     
  3. standtall

    standtall Well-Known Member

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    If you are with Westpac, move to another bank and you will see a boost of 20-30%.

    Otherwise, don't borrow. Banks have set servicing limits for a reason and you will hurt yourself even if you found a way around them.
     
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  4. Andrew H

    Andrew H Well-Known Member

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    yes but what if you have hit the wall with multiple lenders? i have multiple properties with mulitple lenders i dont think switching lenders in an option for some, but vaild points.
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you're completely stuck, you'll need to do one or a combo of a few things -
    • Sell - this can be via splitting an existing property and selling part to reduce debt, or selling non-performing IP's, etc.
    • earn more income - increase cashflow through a second job/biz. Higher rent is okay but not ideal due to the shading applied by the lenders.
    • see a broker to make sure you've completely exhausted all options.
    • look at doing a JV with a partner who has the ability to borrow.
    • get married to a full time income earner - but don't have kids!
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Location:
    Canberra and Sydney
    Hiya

    The obvious option is to have your current structure/capacity assessed. There's plenty of decent brokers on here with a focus towards investment lending.

    If you've got consumer debt - look at getting rid of it. If you have credit cards with high limits - reduce them.

    Review your rental income - could it be improved?

    Can your salary/SE income be increased? Ask for a raise - tell your boss you want to buy more properties :)

    Cheers

    Jamie
     
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  7. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Sydney
    Have you tried Liberty? They are still doing actuals on other lender debts, competitive rates and good (slightly vanilla though) policy.
     
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  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    NAB is pretty generous as well
     
  9. Andrew H

    Andrew H Well-Known Member

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    Cairns, QLD
    thanks jess i like these points, yes i have a good broker (i believe). In terms of selling non performing IP's how would you assess weather it is viable as some were bought pre APRA and still may not be enough to buy another property? I suppose that is the brokers job?
     
  10. Andrew H

    Andrew H Well-Known Member

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    done my limit with them
     
  11. Andrew H

    Andrew H Well-Known Member

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    yeah we've left them up our sleeve
     
  12. Andrew H

    Andrew H Well-Known Member

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    I'm really looking for ideas for pre-purchase. Sorry should have clarified that earlier
     
  13. BigBadBanana

    BigBadBanana Member

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    Location:
    Central Victoria
    Made enquiries with a big 4 bank who said no...tried Bendigo Bank who said yes. Bets bet - shop around or see a broker
     
  14. The Y-man

    The Y-man Moderator Staff Member

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    Melbourne
    Hit limit, went to shares and AREIT to increase cashflow.

    The Y-man
     
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  15. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Working out which ones to sell is your job :)

    Run the numbers on them, see if they're performing how you hoped they would and determine if they are the properties you want to hold long term.

    The ones that are very neg geared with no obvious way of becoming CF+ would be the first I'd look at.

    If you have a PPOR, look at some debt recycling strategies to knock the debt off quickly.
    Look at the possibility of renting out your PPOR and renting somewhere cheaper yourself.
     
  16. Big Will

    Big Will Well-Known Member

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    Am I allowed to have more than one?
     
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  17. Coota9

    Coota9 Well-Known Member Premium Member

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    Yes,but unfortunately you may need to move countries!!:D:D
     
  18. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Just one, so choose wisely ;) Pick a doctor, and take advantage of the LMI rules while you're at it! :D
     
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  19. Ed Barton

    Ed Barton Well-Known Member

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    Once we have gay marriage it won't be long...
     
  20. larrylarry

    larrylarry Well-Known Member

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