Can I do this?

[EstatePreneur]

Hi, I've been wondering if the bank would let me to borrow half of the overall price of a property say if the property is worth $400,000 and my parents kick in with $200,000 upfront. I make $30,000 ($20k from small business + $10k from side job) annually.

If that's a yes answer, would I be able to get a good deal from the bank?

So after purchasing the $400k property, and pay off half of it, I'd then left with $200k. With $25k - $30k income per year, would you think I can do well with the repayment?

My average spending per annual is $10k and that already includes $5200 rent/year. So once I buy the property, I won't have to pay rent again, so my spending should be less although not much due to the misc costs of the property.

Hence, I can throw the $25k for the repayment?



I've been reading through this forum and there're some cases where people buy property that they can afford, suit their budget/annual income i.e. if you earn $20k annually, the bank would lend you $200,000?
I've never dealt with the bank about this, so I'm totally blank about it.

It's time to get some new lessons from the experts here, so any thoughts are welcome pls

 

[sailor]

Hi EP, have you thought about seeing a mortgage broker. They don't charge you, and do all the research on what loans are available for your personal situation. In fact...why not see 2 mortgage brokers and get a second opinion?
Good on you for starting to think about what you can do. The glass is half full.

 

[BV]

EstatePreneur
With $25K income you can normally borrow about $100K
but if you were to rent this place out and live with your parents
the figures would have been much different.
Talk to a mortgage broker, there should be a way to get finance.
cheers.

 

[Qlds007]

EP

A Nodoc loan requires no evidence of income proof subject to a maximum LVR and whilst you still need to meet the loan repayments at the end of the day the suite of products is geared to someone who is unable or who does not wish to show serviceability.

Interest rates vary but start from 7.45% on Nodoc.

 

[EstatePreneur]

EstatePreneur
With $25K income you can normally borrow about $100K
but if you were to rent this place out and live with your parents
the figures would have been much different.
Talk to a mortgage broker, there should be a way to get finance.
cheers.

So basically the bank wouldn't lend me that much money $200.000 with my annual income $25,000?

Hmm, I think a nodoc loan would be my last resort.

EP

A Nodoc loan requires no evidence of income proof subject to a maximum LVR and whilst you still need to meet the loan repayments at the end of the day the suite of products is geared to someone who is unable or who does not wish to show serviceability.

Interest rates vary but start from 7.45% on Nodoc.

Hi Richard, up to how much can I borrow in my case described above?
I thought bank would be at least convinced to lend me $200k since I'm gonna make huge deposit upfront with parents' help, although my income is only $25k per year.

I forgot to mention that part of plan is to purchase a 4 bedrooms house and rent out the other 3 bedrooms, so my annual income will definitely go up to roughly $40k/annual having each bedroom rented at $100/week.

Richard, is that 7.45% the lowest rate for Nodoc loan? Would you think I can find better deal if I shop around?

 

[Qlds007]

Most Nodoc loans are available to a LVR of 70% - 80% from typically non banking lenders and require no income declaration whatsover.

I am not aware of current lower rate for a Nodoc loan but i do stand to be corrected if there is.

 

[BV]

A $200K loan means about $15K in interest per year.
This is too much for someone earning only $25K
but as I said there are ways to get around this problem.
Talk to a mortgage broker.
Good luck.

 

[Les]

G'day Estatepreneur,

Well done for taking a look at improving things (as Sailor said "your glass is half full").

What I think I'm reading here is that your parents can come up with half of the cost. That is excellent, and this very thing (assuming they don't need the money back quickly) means that you CAN get a loan !!! Period.

But, as others have pointed out, that is only one half of the deal - the other half is repayment. Your idea is to rent 3 of the rooms - and, yes, that is certainly a way to bring in more income. But it comes at a cost (CGT being applicable should you sell).

Now, if your plan is to live here, rent rooms, deal with any problems that occur, etc. and NEVER sell, this could work, and work well. Certainly it gives you a leg-up that you may not have had otherwise (your income is quite low, and I'm sure you realise that). Someone else mentioned buying, and renting the whole lot - is that a possibility for you? If so, this could prove even more beneficial (finance-wise) to you.

It seems you CAN get a loan (No-Doc, Asset based finace, whatever - same thing really) - the repayment of that loan, day by day, week by week, is then the only sticking point. If you can make it work, then go for it.

I'm guessing you are younger than many (in your twenties?) so, just starting is probably a good move. Jan says property investing is like watching grass grow - and it DOES seem that way in the first years. And I'd also suggest finding a Mortgage Broker to help guide this early part of your journey.

I, for one, would like to hear more about just what you are planning - 4Bdr, yep, good - but house? where? what kind of tenant? expected rent? furnished or unfurnished? land size? etc. Some things work well in some areas. It would be good to have you expand on just what you want to accomplish. That way, we might guide your steps a little more surely,

Regards,

 

[wish-ga]

Banks won't see the 200k from mum/dad as making you less of a risk of defaulting on the remaining 200k.

They ask if the deposit is your savings or a gift for a reason. What they term 'genuine savings' (backed up by bank statements) is a gauge of what people can sustain while living their life.

Banks have a pretty standard equation to apply.
They estimate a % of your income for mortgage, taking into account debt (student loan, car pments, visa debt) and roughly know how much the average living expenses are for various situations (eg got kids, live at home etc).

You know you can live on less and pay heaps on the morgage. But they have seen other people get in over their head.

Congratulations on getting going on your first property! The lending bit is a hard slog. Give them what they want in order to get the loan then pay, pay, pay onto the mortgage.

If they want genuine savings? Build six months of savings! You would have been putting 1500 onto a mortgage anyway.

Other hurdles - maybe you have to rethink timeframe/house size but you can do it!

With the 200k from m/d you will have great lvr (loan to value ratio) so kudos to you.

GOOD LUCK