Ways to Increase Borrowing Power?

I've sat down with HSBC and Bankwest and have been told I'm currently in a situation where I can borrow ~$600K for a new PPOR by both of them. I was hoping to borrow ~$800K. Apart from earning more money, what are some ways I can increase my borrowing power?

• Can I go for an investor loan, and use the expected rental income (approx $750 per week) to boost it?
• Can I use equity from my parents house (guarantor) to help me somehow?

I'm still living at home, have about $210K savings, no debt, but am looking around the $950K mark for a house in my area.

Any help would be great, thanks!

 

Meet with a great broker. Great broker. I used to work with great brokers and now since I've built solid relationships with a few banks I also go directly. But especially for just starting out I would meet with a great broker to review all your options/strategies/creative ideas. Banks will only tell you wants generally best for them. You may get the seem feedback from a broker but at least you checked/sought all options.

 

Borrowing to buy an investment will get u further because of the potential rental income.

Using parents property as security won't help you borrow more because this would only be an equity guarantee and not assist in servicing.

 

1. Get a partner (2 incomes are better than 1)
2. Get rid of any debt &/or credit cards
3. Buy IP instead of PPOR (as stated above)

Other than that, the only real options I'm aware of are earn more or change your expectations. (i.e. look at areas you can afford or at smaller properties)

FWIW, as what seems to be a 1st residence, I personally can't fathom why anyone would look to spend circa 1M unless they had really deep pockets. I understand the property market in Sydney is ridiculous, but an 800k mortgage would require 800k to be paid in interest over a full loan term. Just madness to those of us not living in Sydney.

 

Find a second job (Uber driver if you cant find one quick enough)
Seek current employer if can negotiate salary or upskill into a better job within in the company
Start a small side business
Get qualified in something specialised

Some strategies to boost you for 2017

 

A couple of ways to get better results:

1. See a broker. Not all banks have the same lending criteria and metrics. There's definitely a few with more generous criteria than those mentioned.

2. Increase income. A second job or salary increase. Unfortunately Uber is veiwed as self employment. This or a small business isn't very useful in the short term as you wouldn't be able to use that income for at least 1 year, probably 2-3.

3. Decrease other debts and liabilities. Close credit cards or reduce limits as much as you can, this has a significant pay off. Get rid of any personal loans. Get rid of student debt if possible.

 

Shown affordability is a massive help.

I asses loans (consumer personal and sme loans) as part of my role at a bank and whilst I don't asses home loans / investment loans the assesors in those areas tell me that if an applicant can show they can afford the loan via savings or a contract agreement with a 3rd party then more of then not the deal is fine to proceed.

N.B this works very well for the first 1-3 loans after that the APRA servicing issues can really take this method out the door

 

Two of the most conservative calculators. You need to test your capacity with other lenders, as it's a certainty that you can get a better $$$ result elsewhere. Contact a broker

 

See an awesome broker - plenty on here. Some have already posted.

Cheers

Jamie

 

Maybe rentvest for a bit
Stay at home that little longer buy the house you want as a investment property first . I think the banks take around 70% of the property's rental income and that can go on to your borrowing ability that might maybe just get you over the line and you will get some benifets of buying as a investment first tax deductions etc

 

Oh and yes talk to a broker ether then the banks they can loot at many differnt options

 

Whatever you do, don't lie on an application to try increase your borrowing capacity. (ie saying its an investment property, when its a PPOR).

Use a broker, the lenders suggested are at the bottom end of borrowing capacity so you'd no doubt be able to eek out a higher capacity elsewhere.

Using a guarantor won't increase your ability to borrow funds as that is a different part of the equation (deposit), not borrowing capacity (ability to afford to pay back a loan).

 

A combination of:
1. Lender choice (not sure how HSBC's calculator stacks up against the rest).
2. Choosing to rentvest (stay at home instead of purchasing as OO).

You should be able to gain an extra $200k this way. May need to do both (the second point will definitely work, but obviously involves a different choice).

Guarantor helps with the deposit part of the equation, not the borrowing power part of it. With your cash balance, you should have close to enough to cover this deposit anyway, so a guarantor is unlikely to help much.

 

Why? I was told the bank was only concerned whether they could sell the property or not.

 

I have just found an article about this sort of thing and I understand the higher risk with IR.

I guess best thing you could do in this situation is use COVID and workplace restructuring as grounds for changing the loan type after application.