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Unique Situation - Am I serviceable?

Discussion in 'Property Finance' started by izzy16, 12th Oct, 2016.

  1. izzy16

    izzy16 New Member

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    Hi guys,

    Long time reader - first time poster.

    Here's my situation:

    Recently sold my PPOR and have a profit leftover of $210,000 sitting in the bank
    Freeloading at Mum's until we get back into the market (very little living expenses)
    Unemployed at the moment (been self-employed last 3 years and decided to move back into full time work - looking likely I'll start a permanent role next week ~$100K pa base)
    Married (wife doesn't work) with one dependent (5 months old)
    No debts/loans or a cent owed anywhere else

    Given the situation above, if I spoke to a broker about a ~700K loan for an IP while I still lived at Mum's for the next 12 months would I be laughed at, considering I'm not employed at the moment?

    I guess there's some factors here that look favourable for a lender, and some that don't - so wondering if I'd be wasting my time talking to anyone?

    Thanks for any input.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Perth WA
    Are you actually unemployed, or are you self employed? If you couldn't find permanent work, would/could you resume the business?

    If you are actually unemployed and the SE biz is sold, or similar, you'll need to wait until you have work to apply for a loan.
     
  3. Indifference

    Indifference Well-Known Member

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    Firstly welcome to PC.

    Until the MBs arrive, where is the loan serviceability coming from if you have no income?

    Waiting until you have a couple of pay slips will be viewed significantly different

    Edit: @Jess Peletier beat me to it.... :)
     
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  4. izzy16

    izzy16 New Member

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    Business has been wrapped up and been unemployed last 2 weeks.

    How much employment history would I need before going for a loan? 3 months / 6 months? More?
     
  5. izzy16

    izzy16 New Member

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    Thanks! Nice to be here.

    I was assuming it would come from the tenants that rent the IP? Is rental income considered when going for a loan?
     
  6. Indifference

    Indifference Well-Known Member

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    Yes but so are your personal household expenses which are deducted from your net income to determine what's left to service the loan.... which on paper, is currently zip as far as a bank is concerned.

    Edit: once you confirm the job a MB can run some numbers & let you know your options with various lenders.
     
  7. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    As little as 1 day for part time/perm employees with some of the better lenders. Some lenders will require 3-6 months but overall lenders are a lot more understanding than they were just a few years ago.

    In terms of your situation, basic mud numbers show that if you're employed at that level a 700k IP loan isn't out of reach pending verification of all of the other pieces of information, potential rental income etc.

    Touch base with an investment focused broker to ensure you're setup as effectively as possible, there's plenty of quality brokers on this forum who services clients across Australia.
     
    Last edited: 12th Oct, 2016
  8. albanga

    albanga Well-Known Member

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    Yep CBA great in this space, wife was employed for a week full time and no issue using salary.
     
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  9. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Others have covered it. Once in a new role, some lenders will look at you pretty soon after.
     
  10. izzy16

    izzy16 New Member

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    Ok so seems I'll be better positioned with some full time work under my belt. I might revisit this a few months into a job.

    One last question, I've used a few of the borrowing power calculators online from the big banks. I'd be putting in expected rental income on these wouldn't I? Do lenders only factor a percentage of expected rental income or all of it?

    Thanks all for your help.
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Don't waste your time with those calcs - they're not accurate by any means.
     
  12. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Don't bother using the lenders online calculators - they're NOT accurate at all, just a sales tool. The real calculators have 20x more fields and very specific policy rules for them. DIY is great until you find out all the things you did wrong. ;)
     
  13. Jerry O

    Jerry O Well-Known Member Premium Member

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    Most lenders would only take in 80% of the gross rental income.
    Don't rely on those online calculators. They are a waste of time, they will show you nice numbers to get you to call them. Some online calculators, if you allow them, will do a credit check on you and that will stay on your credit file. Too many credit hits on your file with short intervals will hurt you badly in the future.