I thought the 80% burrowing equity is calculated as $1,000,000 (property value) - 500,000 (loan) = $500,000 x80% = $400,000 will be bank be willing to lend?????
Hi @ricnicodemus3865, good question :) The bank will lend up to 80% of the value of the property. So in this case the property is valued at $1,000,000. This means the maximum loan the bank can offer is $800,000 ($1,000,000 x 80%). With the existing loan being $500,000, it would mean the accessible equity would be $300,000 (or 80% of the property value minus the existing loan amount of $500,000. That is, $800,000 - $500,000). Hope this makes sense? Thank You
You still need to be able to afford the repayments. Sure 2nd property maybe goes up in value then after 1 year you sell make $100 K and pay capital gains. Sure some neg gearing deductions and depreciation...but still a decent tax bill
I'm all in. Curent house worth 1.4M $340,000 left to pay. looking for investment property, [found one @ $350,000 to buy with rental income of $420 a week] with little to no adjustment in repayments to current loan. (ie, rental income of new property should cover cost of higher interest rate) which means, "same" repayments as of current for me personally, with income of investment to cover the extra repayments. Yes/No, shoot me the DM fam.
Hey guys, i always appreciate all of your videos, always find use from them, hoping to contact you in a few months for your services. I do have a request though - could you PLEASE do a video on maximum exposure limits in Australia? my point of view is having a good investment in Ipswich, i want to pull out equity to get 3-4 investment properties with each having a deposit sitting at around 8-10%. I have worked out all expenses (from mortgage to water connection costs) and i can afford repayments and everything fits at a good amount in relation to the household income - but, dont know what the mortgage exposure limit would be - ie, how does one get a few houses, gain equity, get more deposits for more houses etc. and not run into their exposure limit? how do i get around that?
Hi @kimlisia7458. Thank you for your kind words and interest in our services! We're thrilled to hear you find our videos useful and look forward to potentially working with you in the future. Regarding your query on maximum exposure limits for obtaining multiple investment properties, it's a great question and one that many investors ponder as they look to expand their portfolios. In Australia, lenders typically use a debt-to-income ratio to determine how much you can borrow, with a common benchmark being approximately six times your annual income. This includes considerations for rental income. Lenders often apply certain adjustments, such as using an 'assessment rate' higher than the actual interest rate for calculating repayments-often over 9%. Additionally, lenders may only count 70% of your rental income towards your borrowing capacity to account for vacancies, maintenance, and other expenses. Keep in mind that under the National Consumer Credit Protection Act, banks are required to lend responsibly. This means there comes a point where additional borrowing may not be possible under traditional lending criteria. For those looking to build a large property portfolio, exploring non-conforming lenders might be an option. Unlike traditional banks, non-conforming lenders have more flexible lending criteria as may not be bound by the same government legislations which means it can significantly enhance your borrowing power. However, it's important to note that these loans often come with higher interest rates or fees, reflecting the increased risk to the lender. Choosing to go with a non-conforming lender is a strategic decision that should be carefully weighed against your investment goals and financial situation. While they can provide the means to grow your portfolio beyond conventional borrowing limits, the costs and terms of these loans need to be considered as part of your overall investment strategy.
Great video! I have a question - I am going to purchase my first property later this year (Aug/Sep) I have almost 200k savings but wanting to put only 100-120kish down on first one. That will leave me with a bit of money leftover. (80-100k but still aggressively saving more each month) Would you suggest going straight into the second property, or spend a bit of time trying to pay down the first house. Then, a bit later, use the equity from that house to purchase the second? Keeping in mind I only have a borrowing capacity of 500k.
Hey Sarah, It sounds like you're in a strong financial position with a good amount of savings to start your property journey. With a deposit of $100-120K and a borrowing capacity of $500K, you're well placed to make your first property purchase. Deciding whether to buy a second property immediately or focus on paying down your first mortgage depends on a few factors, including your financial stability, risk tolerance, and the real estate market conditions. When you are ready hit us up and we can review to see what makes sense to you www.huntergalloway.com.au/ thanks, Jayden
Hi @sarahs3752. Thank you for your question. It sounds like you're in a situation where two individuals are involved in a mortgage, but only one person's name is on the title of the property. If you're considering adding the second person-who has not previously bought a property-to the title, the implications for stamp duty can vary significantly based on a few key factors: the state or territory in which the property is located, and the nature of the relationship between the two individuals (e.g., spouses, de facto partners, relatives, or investors). In some states and territories, there are concessions or exemptions from stamp duty for transfers of property between certain parties, such as spouses or de facto partners, even if one of the parties already owns a property. However, these rules can differ widely depending on the jurisdiction and specific circumstances of the transfer. It's crucial to seek personalised advice from a legal professional or conveyancer who is familiar with the property laws in your specific state or territory. They can provide guidance tailored to your situation.
doesnt taking out equity then reset your mortgage back to 30 years ? why is equity good for renovation or is it not a good idea to increase house value.
No, taking out equity doesn't automatically reset your mortgage back to 30 years. When you access the equity in your home, typically through a home equity loan or a line of credit, you're borrowing against the current value of your home minus what you still owe on your mortgage. This can be a separate loan with its own terms and repayment schedule, distinct from your original mortgage - or you can add it to your original loan and keep that original loan term.
Hi @tirituatai2453. Absolutely not. A mortgage broker does not have the authority to use a client's equity for their own personal purposes. The equity in your property belongs solely to you, and any access to this equity without your explicit consent and knowledge is not only unethical but also illegal and can be classified as fraud. Mortgage brokers are professionals whose role is to act in the best interest of their clients, facilitating financial transactions and providing advice on mortgage products. For example, if you're looking to utilise your equity to finance the purchase of a car, a mortgage broker's job is to assist you in securing a loan against your equity. They guide you through the application process, ensuring that you understand every step and how your equity is being used. Once the process is completed and the loan is settled, you would then have access to the funds to proceed with purchasing the car. At no point should a mortgage broker have direct access to these funds for personal use. If there's any suspicion of misconduct or fraud, it's critical to report it to the appropriate regulatory bodies immediately. Mortgage brokers are regulated by strict laws and codes of conduct to ensure they act ethically and in their clients' best interests at all times. If you ever feel unsure about the process or how your equity is being handled, it's important to seek clarification or a second opinion.
Hi guys u mentioned that" higher the income and lower ur expenses banks lend u more money " But isn't the banks check the spending based on their general ratios ? So even if u earn 100k and have the minimalist expenditure in Australia , banks will still refer to that ratio ? ( This was told by me by Bank SA ) Is that correct ??
Hi @susmusmanoj112, thanks for your question! You're correct that banks do use a general ratio to estimate living expenses, known as the Household Expenditure Measure (HEM). However, if your actual living expenses are higher than this benchmark, the bank will consider your real expenses instead. In essence, banks aim to ensure that any lending is responsible and that borrowers can comfortably manage their repayments without financial strain. If you have a significant income and maintain minimal living expenses, it’s advantageous, as it potentially increases your borrowing power. But it's important to note that banks always look to lend responsibly, ensuring that borrowers aren't stretched beyond their means. They'll use either their minimum expenditure benchmark or your declared living expenses, whichever is higher, to calculate your ability to service a new loan.
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I thought the 80% burrowing equity is calculated as $1,000,000 (property value) - 500,000 (loan) = $500,000 x80% = $400,000 will be bank be willing to lend?????
Hi @ricnicodemus3865, good question :)
The bank will lend up to 80% of the value of the property. So in this case the property is valued at $1,000,000.
This means the maximum loan the bank can offer is $800,000 ($1,000,000 x 80%).
With the existing loan being $500,000, it would mean the accessible equity would be $300,000 (or 80% of the property value minus the existing loan amount of $500,000. That is, $800,000 - $500,000).
Hope this makes sense?
Thank You
You still need to be able to afford the repayments.
Sure 2nd property maybe goes up in value then after 1 year you sell make $100 K and pay capital gains.
Sure some neg gearing deductions and depreciation...but still a decent tax bill
I'm all in.
Curent house worth 1.4M
$340,000 left to pay.
looking for investment property, [found one @ $350,000 to buy with rental income of $420 a week] with little to no adjustment in repayments to current loan. (ie, rental income of new property should cover cost of higher interest rate) which means, "same" repayments as of current for me personally, with income of investment to cover the extra repayments. Yes/No, shoot me the DM fam.
Hey guys, i always appreciate all of your videos, always find use from them, hoping to contact you in a few months for your services. I do have a request though - could you PLEASE do a video on maximum exposure limits in Australia? my point of view is having a good investment in Ipswich, i want to pull out equity to get 3-4 investment properties with each having a deposit sitting at around 8-10%. I have worked out all expenses (from mortgage to water connection costs) and i can afford repayments and everything fits at a good amount in relation to the household income - but, dont know what the mortgage exposure limit would be - ie, how does one get a few houses, gain equity, get more deposits for more houses etc. and not run into their exposure limit? how do i get around that?
Hi @kimlisia7458. Thank you for your kind words and interest in our services! We're thrilled to hear you find our videos useful and look forward to potentially working with you in the future. Regarding your query on maximum exposure limits for obtaining multiple investment properties, it's a great question and one that many investors ponder as they look to expand their portfolios.
In Australia, lenders typically use a debt-to-income ratio to determine how much you can borrow, with a common benchmark being approximately six times your annual income. This includes considerations for rental income.
Lenders often apply certain adjustments, such as using an 'assessment rate' higher than the actual interest rate for calculating repayments-often over 9%. Additionally, lenders may only count 70% of your rental income towards your borrowing capacity to account for vacancies, maintenance, and other expenses. Keep in mind that under the National Consumer Credit Protection Act, banks are required to lend responsibly. This means there comes a point where additional borrowing may not be possible under traditional lending criteria.
For those looking to build a large property portfolio, exploring non-conforming lenders might be an option. Unlike traditional banks, non-conforming lenders have more flexible lending criteria as may not be bound by the same government legislations which means it can significantly enhance your borrowing power. However, it's important to note that these loans often come with higher interest rates or fees, reflecting the increased risk to the lender.
Choosing to go with a non-conforming lender is a strategic decision that should be carefully weighed against your investment goals and financial situation. While they can provide the means to grow your portfolio beyond conventional borrowing limits, the costs and terms of these loans need to be considered as part of your overall investment strategy.
Great video! I have a question - I am going to purchase my first property later this year (Aug/Sep)
I have almost 200k savings but wanting to put only 100-120kish down on first one.
That will leave me with a bit of money leftover.
(80-100k but still aggressively saving more each month)
Would you suggest going straight into the second property, or spend a bit of time trying to pay down the first house. Then, a bit later, use the equity from that house to purchase the second?
Keeping in mind I only have a borrowing capacity of 500k.
Hey Sarah, It sounds like you're in a strong financial position with a good amount of savings to start your property journey. With a deposit of $100-120K and a borrowing capacity of $500K, you're well placed to make your first property purchase.
Deciding whether to buy a second property immediately or focus on paying down your first mortgage depends on a few factors, including your financial stability, risk tolerance, and the real estate market conditions. When you are ready hit us up and we can review to see what makes sense to you www.huntergalloway.com.au/ thanks, Jayden
@@MortgageBrokerAustralia thanks Jayden! Just submitted Enquiry online 😊
Thanks. What happens if you have two people on the mortgage-one owns a house, one has never bought. Do you have to pay the whole stamp duty or not?
Hi @sarahs3752. Thank you for your question. It sounds like you're in a situation where two individuals are involved in a mortgage, but only one person's name is on the title of the property. If you're considering adding the second person-who has not previously bought a property-to the title, the implications for stamp duty can vary significantly based on a few key factors: the state or territory in which the property is located, and the nature of the relationship between the two individuals (e.g., spouses, de facto partners, relatives, or investors).
In some states and territories, there are concessions or exemptions from stamp duty for transfers of property between certain parties, such as spouses or de facto partners, even if one of the parties already owns a property. However, these rules can differ widely depending on the jurisdiction and specific circumstances of the transfer.
It's crucial to seek personalised advice from a legal professional or conveyancer who is familiar with the property laws in your specific state or territory. They can provide guidance tailored to your situation.
doesnt taking out equity then reset your mortgage back to 30 years ? why is equity good for renovation or is it not a good idea to increase house value.
No, taking out equity doesn't automatically reset your mortgage back to 30 years. When you access the equity in your home, typically through a home equity loan or a line of credit, you're borrowing against the current value of your home minus what you still owe on your mortgage. This can be a separate loan with its own terms and repayment schedule, distinct from your original mortgage - or you can add it to your original loan and keep that original loan term.
Can a mortgage broker use the client’s equity for his own personal use without client knowing
Hi @tirituatai2453. Absolutely not. A mortgage broker does not have the authority to use a client's equity for their own personal purposes. The equity in your property belongs solely to you, and any access to this equity without your explicit consent and knowledge is not only unethical but also illegal and can be classified as fraud.
Mortgage brokers are professionals whose role is to act in the best interest of their clients, facilitating financial transactions and providing advice on mortgage products. For example, if you're looking to utilise your equity to finance the purchase of a car, a mortgage broker's job is to assist you in securing a loan against your equity. They guide you through the application process, ensuring that you understand every step and how your equity is being used.
Once the process is completed and the loan is settled, you would then have access to the funds to proceed with purchasing the car. At no point should a mortgage broker have direct access to these funds for personal use. If there's any suspicion of misconduct or fraud, it's critical to report it to the appropriate regulatory bodies immediately.
Mortgage brokers are regulated by strict laws and codes of conduct to ensure they act ethically and in their clients' best interests at all times. If you ever feel unsure about the process or how your equity is being handled, it's important to seek clarification or a second opinion.
Hi guys u mentioned that" higher the income and lower ur expenses banks lend u more money "
But isn't the banks check the spending based on their general ratios ? So even if u earn 100k and have the minimalist expenditure in Australia , banks will still refer to that ratio ? ( This was told by me by Bank SA )
Is that correct ??
Hi @susmusmanoj112, thanks for your question!
You're correct that banks do use a general ratio to estimate living expenses, known as the Household Expenditure Measure (HEM). However, if your actual living expenses are higher than this benchmark, the bank will consider your real expenses instead. In essence, banks aim to ensure that any lending is responsible and that borrowers can comfortably manage their repayments without financial strain.
If you have a significant income and maintain minimal living expenses, it’s advantageous, as it potentially increases your borrowing power. But it's important to note that banks always look to lend responsibly, ensuring that borrowers aren't stretched beyond their means. They'll use either their minimum expenditure benchmark or your declared living expenses, whichever is higher, to calculate your ability to service a new loan.
Can you use equity to buy property overseas? Or can you use it for anything? 🏰
In Australia, unfortunately not. The banks here can only take security (and give loans) over properties that are held here in Aus.