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I have aprox $210K in equity in the unit I live in, how much would the bank lend me for an investment property?

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Sam | 15 Nov 2013, 03:49 AM Agree 0
what is the maximum do you think they would lend me, I make about only 40K a year too
  • Mark Coburn | 19 Nov 2013, 10:41 AM Agree 0
    Hi Sam,

    I would need a few more details.
    How much the mortgage is on the unit (if you have one)?
    How long you have owned the unit?
    How long you have been with your employer?
    Permenant full time or casual?
    if you wish to explore your options give me a call.
    Regards Mark Coburn 0405 243 547 -
    Stepping Stone Buyer's Agents - Property Investment Advisors
  • Goodo | 26 Nov 2013, 12:55 PM Agree 0
    Sam,

    Lenders will normally lend up to a maximum of 80% of purchase price without requiring mortgage insurance. This means to avoid mortgage insurance, your "equity" will be reduced to 80% of the bank value of your unit LESS the outstanding loan balance. It will be less than your estimate unless worked out this way.

    You can then borrow these funds and use towards the deposit and costs for the new investment property (suggest you allow for this to cover 20% deposit + 5% costs). This will give you an idea how to work out the "Equity" side of the loan that a lender will require and your maximum borrowing amount.

    The other major side that a lender will consider is the "affordability" or your ability to repay the debt.

    Under Gov't regulation all lenders are required to ensure they are not placing you into financial hardship by giving you any new finance. To do this they will want to see income (wages / new rental etc) which will cover the following:
    1. Any and all loan commitments that you have + new loan. The lender will stress test the repayments by about 2% to 2.5% above current variable rates (work on 7.5% to 8.0%)
    2. A reasonable standard of living - they will use set tables for minimum living costs This will vary based on marital status & number of children.
    3. Have surplus funds left over.

    Having only an income of $40K + proposed rental on the property will be your limiting factor for any investment loan.

    I suggest you talk to a good local broker or you can contact me.

    Stephen Goodwin
    Franchise Owner
    Resi Mortgage
    0405388467
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