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

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?

 

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

 

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.

 

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.

 

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!

 

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

 

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

 

NAB is pretty generous as well

 

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?

 

done my limit with them

 

yeah we've left them up our sleeve

 

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

 

Made enquiries with a big 4 bank who said no...tried Bendigo Bank who said yes. Bets bet - shop around or see a broker

 

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.

 

Am I allowed to have more than one?

 

Yes,but unfortunately you may need to move countries!!

 

Just one, so choose wisely Pick a doctor, and take advantage of the LMI rules while you're at it!

 

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

 

another thread on the same topic - Ideas to buy more properties while hitting serviceability wall