G’Day,
Yza Canja is back with some finance answers for you. Remember to email questions@cmoney if you wish to submit a question.
Q.2 What percentage of my income would the bank want to be towards a home loan that I could sustain in their eyes?
A.2 There is no set percentage that a bank looks at with regards to how much of your income goes to your home loan. Different banks look and assess your capacity to make repayments in many different ways, this is made up by an overall consideration of what you earn and ALL your regular outgoings (any existing debts) plus living expenses. Though in general, the old rule of thumb was that no more than 1/3 of your income should go towards your housing costs, but in this day and age of multiple investment opportunity, and multiple debt opportunities, the rules have been changed to consider a more holistic scenario of your cash flow, and added on to that different lenders have different views of how this would work. Its best that you review where your financial situation sits at the moment and you may be able to maximise your borrowing capacity.
Q2. As a property investor, I have many different company trusts (say 10)
holding at lease 20 properties. At this point, if I am to seek more finance
to buy more properties in a new trust (to be created), do I need to provide
you with all the paper work for each of my trusts?
If so, why do they need these information since there is no relationship
with the newly created trust?
A2. The quick answer to this is Yes, as your
finance strategist it is best that you provide us with all information on
all the trusts that you are involved in. We then go through your
information and determine what information is necessary to provide to the
different lenders, and which information does not need to be shown. To give
you a thorough strategy we need to understand your OVERALL finance position.
This way we can act as a filter between yourself and the lenders and you
need not supply the lenders with information that is not relevant or
necessary.
Different lenders have different requirements, not all lenders require all
the information about your separate trusts, but some do, so it is best that
we map out the strategy first and this includes determining which lenders we
go to, at what time and for what purpose. This all depends on what the
lender’s criteria is and what the new purpose of the loan is (i.e. a
refinance, new property purchase, new development). In this market the
lending criteria is constantly changing so it is best that you get as much
information about the lenders requirements before considering a loan
application with them.
The balance and the key to a successful finance application is by providing
the lender all of their required documents, but also knowing what
information is not required. The only way to successfully do this is by
working closely with your finance strategist to understand the different
lender requirements before you even approach a lender. This is another
reason why we recommend that you work with a broker rather going directly to
a bank.
Cheers
Carly










