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VIC Wanting to buy my first IP

Discussion in 'Where to Buy' started by Wonderland, 1st Jul, 2015.

  1. Wonderland

    Wonderland Active Member

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    Hi everyone, my first post here. I currently live in south eastern suburbs. I'm looking to buy my first IP in about another years time. I've only currently started contracting work and the broker I recurrently spoke to told me I needed at least a year of working history before the banks will lend me any money. So I have a year to research. I wanted to know how do I go about researching an area for buying, what kind of data do I need to look at to decide whether it's a good area to invest in? I'm looking for a long term IP and would preferably like to buy a house rather than a unit as I've learnt that land is what goes up in price rather than the dwelling.

    Seems like there are alot of very knowledgeable people here so thank you in advance for all the advice ☺
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I think you need a new broker.

    If you're employed on a casual basis, most lenders will want to see 12 months of employment history, but there's a couple that only need 3 months in your new job.

    If you're employed on a permanent basis, the most conservative lenders will want 3 months history, there's a few that will do it on a single payslip if the conditions are right.
     
  3. Wonderland

    Wonderland Active Member

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    Really?
    I guess the problem is that I was working part time in a completely different field to what I'm doing now. Then I took 6 months off and now am doing contracting work in something different to what I was doing before. I took 6 months off because I had a baby. My husband works full time but we have 2 dependent kids so I figured that didn't help our case.
    Although in saying all this, the broker I spoke to had only just been in the industry for a year so I'm not too confident on his knowledge
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Even in the worst case, you're only looking at a 3 month limitation if it's a permanent part time position or a contract role. You'd only have the 12 month limitation if the role is casual. Like I said, there are a few lenders that don't require that much.
     
  5. Wonderland

    Wonderland Active Member

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    Thanks Peter. Yes this will be a permanent contracting work. But how would you be able to prove to the bank it's permanent if they only look at 3 months?
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Often the type of employment will be noted on your payslip. Occasionally it may be necessary to get an employment letter or a copy of your employment offer.
     
  7. larrylarry

    larrylarry Well-Known Member

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    Get a broker who understands investment and actually have good investment properties themselves .
     
  8. Wonderland

    Wonderland Active Member

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    I'll be contracting so I'll be writing up an invoice on a monthly basis. I guess I can get a letter written up to state that I'm guaranteed work for at least a few years
    Do you know where I would go to find a good broker? Should I be trying to see a mortgage broker or financial planner?
     
  9. 4GH1RH

    4GH1RH New Member

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    I got new loans from NAB and CBA through my broker (SS member) after 3 months in a new job (and after not being formally employed for 18 months before that) so it is possible. I got a letter from my employer stating my role and that I was successfully past the probationary period.
     
  10. larrylarry

    larrylarry Well-Known Member

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    There's a few here on propertychat. How about Peter? :)
     
  11. Redom

    Redom Mortgage Broker Business Member

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    Ok before putting your existing broker under the bus - who is paying your tax?

    Are you being paid by to your own ABN and paying your own tax or is your employer paying your tax?

    If its the former, you'll generally need 2 years history with your past. You can seek exemptions with 1 year with strong files though, but its effectively a self employed situation.

    If its the latter, can get away with 3 months as Peter mentioned.

    This is the work that most brokers who specialise in investments will be able to do for you no dramas. Plenty of good ones on here and around Melbourne. An accountant is separate and involved in trust setups, tax returns, advice, etc.

    Cheers,
    Redom
     
  12. Redom

    Redom Mortgage Broker Business Member

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    @4GH1RH

    Nab have been brilliant here. One of my core group of clients are APS graduates. Had a few deals where NAB accepted (at 90%) without them even starting. All i needed to show was the contract (which had a 6 month probationary period in there) and some estimates for rental cost - most were moving to Canberra.

    Cheers,
    Redom
     
  13. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    This clarifies things a bit. You're going to be treated as self employed which means you can't use payslips to verify your income, you'll need to use tax returns. Invoices and employment letters don't work either.

    Whilst there are a few lenders who only need a single tax return, the general minimum requirement for self employed income is that you're self employed for at least 2 years. Depending on the nature of your work and what your tax returns and BAS statements show, you might be able to get away with only 1 year.

    If at all possible, I'd strongly suggest you approach your employer to see if you can renegotiate as a PAYG contractor, rather than a self employed contractor. This will vastly accelerate your ability to qualify for finance.

    The other option is to simply use your partners income for affordability purposes. Whilst this would mean a reduced borrowing capacity, it would probably mean not waiting at all.

    Financial planning and mortgage broking are quite different things. Financial planners aren't licensed to give advice on loans. There are plenty of great mortgage brokers on this forum.
     
  14. Wonderland

    Wonderland Active Member

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    Redom, I am in fact in the former category. I'm self employed, paying my own taxes etc. Our broker said with a joint name (husband and myself), we can borrow about $200k because we have alot of equity in our ppor. But if we wanted to borrow more money, I need to be working for at least 2 years.

    Peter what is the difference between me paying my own taxes to him paying my PAYG? I can ask him to do that but would it make it harder for him if we were to set it up that way? I don't really want to rock the boat seeing this is all quite new
     
  15. Wonderland

    Wonderland Active Member

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    Also back to my original question, what do people do or look at when researching which areas to buy? What type of data do people collect to determine which area to buy an IP in? I'm looking for a buy and hold IP so would like to find an area that would have good CG
     
  16. larrylarry

    larrylarry Well-Known Member

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    Hi wonderland there's awesomely lot of good tips on this forum. Do a search. But it comes to your strategy and timeframe to achieve your goals. Currently I'm looking at profile ID and SQM. And...do as many inspection as I can.
     
  17. Wonderland

    Wonderland Active Member

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    Yes I definitely will be doing alot of reading on here, thank you!

    Can I ask what profile ID and SQM is?
     
  18. larrylarry

    larrylarry Well-Known Member

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    Profile ID:
    .id has delivered suburb-based community profiles to councils across Australia and New Zealand. These are delivered in public websites, branded profile.id, for anyone to access. Click on the link below to access demographic analysis based on results from the Census. Results include population, age structure, ethnicity, ancestry, religion, income, qualifications, occupations, employment, unemployment, disability, disadvantage, volunteering, childcare, family structure, household structure, housing tenure, mortgage and rental payments, and the size and type of the dwellings people live in.

    SQM produces results based on your search for demographics, prices, wages etc. Similar I guess.