Help - property investing

[JD86]

Hi Guys,

as some of you may know, I lost my job around 7 weeks ago, I was made redundant as the boss could not afford to keep the business running.

I have managed to find a new job, and I am really enjoying it. I have been there 5 weeks now.

The only downside is, I am sort of working as a sub-contractor.
I am an architectural draftsman, and have a little business on the side. As I am still young, I want full time employment for security and experience.
I am acting at my new job as a full time employee, in that I work 9-5, 5 days a week. The boss pays for all equipment etc. required. I go to the office every day, do not work from home. By all means I am a full time employee, except my boss likes to pay me as a contractor (I believe it is easier for him).

Now this is working well for me, I am clearing around $200 per week more than my previous job after I put away 20% for tax.

I own a house which is valued at $350k, and the loan is $230k.

My income is now $960 per week clear (after putting 20% away for tax on my mortgage) and mortgage is $360 per week.

I feel I am in a position to buy an investment property, so I have asked my mortgage broker to investigate how much I can borrow etc.

He is mid-investigation but has warned that some banks will consider me self-employed and will need 2 years of financial records.
Whilst I have had my ABN for approx. 5 years or so, I have only eanred minimal amounts through it as I have been a full time employee during that time with a small side business.

I believe that if I ask, my new boss will write a letter stating I work full time and my probabtion period is over.

I am not planning to borrow/buy for another few months so I will have been at new job maybe 4 or 5 months by then.
I have just started this process to get a pre-approval so I can see how much I can borrow and start investigating properties.

What can I do in my current position? I do not want to wait 2 years to be able to buy an investment property. Am I jumpiong too early at my mortgage brokers warning or should I be genuinely concerned that I wont be able to borrow?

Also, do you guys think the following is a good plan?

My house is valued at $350k with a loan of $230k. I can rent it out for around $350 per week which will make it almost neutrally geared.
So my plan in the next few months is to rent it out, and buy an investment property as mentioned above, that hopefully isnt too negatively geared whilst my girlfriend and I rent a house together. Because I'll be sharing rent with my girlfriend, my expenses will drop a fair bit. Then, after a year or so, if both investments are going well, I can borrow to buy another property and so on...

Any advice appreciated

Thanks

 

[Macca]

Hi JD,

I think the way you have presented your case here is the way to present it through your broker.

Find out about your finance and then look for a bargain to grab

 

[Aaron Sice]

if you want any cash with an ABN on full doc you'll need 2 years.

 

[Aaron_C]

if you want any cash with an ABN on full doc you'll need 2 years.

Yep. That's where Lo-Doc is your friend.

 

[JD86]

hi guys, i am dragging out this old thread because i feel i am almost ready to buy an investment.
once this financial year is over, i will have earnt approx. $60k through my ABN, and $13k as a full time PAYE employee at my previous job.
I am still at the new job, contracting.
my house is valued at $360k with mortgage repayments of $340 per week.
i have approx. $10k cash to contribute towards an investment.
my mortgage broker is saying because i am considered self employed, i can only go low-doc. he states that i need t contribute approx. $28k cash towards an investment with a purchase price of $300k using my current house as security, but leaving the mortgage at $230k.
i asked him if i could contribute $10k cash, and lend the remaining $18k against my existing house, as it will still be under 80% LVR, to make up the $28k total needed to contribute to new purchase to stay under 80%, but he has said i cannot

also, if my current employer writes a letter stating i am full time employed, my position, my new salary, my commencement date etc. but i get paid through my ABN and pay my own tax, will they consider me for a normal home loan and not low doc?

i am a little frustrated with my broker, he is from mortgage choice and keeps pushing his calculations towards blue gum

if anyone can help it would be appreciated

thanks

 

[redwing]

Brokers as a rule are frustrating JD

Then again, I guess they get a lot of tyre kickers

Maybe try a couple of recommended ones from the forum and see whom responds timely and you will have a good insight as to your current position from a finance perspective

 

[Aaron_C]

Hi JD,

if you have sufficient equity in your current home you can certainly use that equity to contribute to the investment property - so I don't know what your broker is talking about. This applies to both full-doc and lo-doc loans. Your situation is a little complicated because of your employment situation but it's not something that can't be overcome.

BTW redwing - we can be a frustrating lot but usually it's the banks who are the problem, not us

 

[Wandering]

JD, just slightly off topic, taking into account not getting Super, Annual Leave or Sick Leave entitlements are you sure you are actually ahead compared to your last job? Might be good for your cash flow but make sure you keep some diversification in your investing going forward.