How to move forward?

[richard56]

Hi
Hypothetical question this one.

House GV=$550,000
80% = $440,000-$150,000 already used on first mortgage.
Leaves $290,000 available before we get to 80%


But you have a low wage...say $70,000.
What do you do if the bank say yes but you can only afford to service another $100,000 on
your current wage.?
Dosent that mean that the other $190,00 is locked away and you cannot use it until your have
a larger wage to service the extra $190,000 ???????????
Or have I got it completely wrong?
Richard

[speights boy]

John Bolton, principal and advisor at Auckland-based mortgage broker Squirrel, said bank risk appetite for higher LVR loans had clearly improved since 2009-2010.
Bolton said, however, the banks are being more conservative with their borrowers than they used to be, seeking job stability, good debt servicing ability, good incomes, a genuine saved deposit of at least 5%, and people who don't have much other debt.
The typical couple clients have combined annual income of about NZ$160,000 and want to buy a house in the NZ$500,000 to NZ$600,000 range, equivalent to about four times their income, said Bolton.

If incomes do not match property price rises, then serviceability will become limiting as opposed to LVR

[Ivan McIntosh]

Don't forget that if you're using the money to purchase a rental, the income from the rental comes into play as well...

[Wayne]

Don't forget that if you're using the money to purchase a rental, the income from the rental comes into play as well...

but not all of it - banks have differant rules on how much of the rent they will take into account. But it will help.

[Ahar]

But you have a low wage...say $70,000.

Actually I don't believe 70K is a "low wage".......the average is I believe around the 50k mark which makes your income about 40% above the average

The typical couple clients have combined annual income of about NZ$160,000 and want to buy a house in the NZ$500,000 to NZ$600,000 range, equivalent to about four times their income,

And nor do I beleive this.....in 2010 the average household income in Browns Bay was only about 68k........ and can't see any reason for a huge increase

A combined income of 160k puts these folk way out in front......probably in the top 10% of income earners......hardly average

Unless of course it's only the top 10% of income earners are trying to get a mortgage for a first home.

Mind you I'm such an old grouch that whenever I hear of high income earners (160K) complaining about how hard it is to buy a house I'm overcome with a rather strong urge to smack them......Ok I know they weren't complaining

But good grief....they have this HUGE income and only saved 5% of 600k.....30k for those without a calculator

That's pathetic.....oh dear where's the cat.....I want to hit/kick something

[mattinvestor]

haha nice comment ahar, but i agree that 70k is not low
you can do alot of good investing with that amount!

[richard56]

Hi
Yes I agree that my wage of $70,000 doesn't feel low...I can pay off my first house and live quite nicely at the moment.
Now that I understand that you can be in my situation where..."serviceability will become limiting as opposed to LVR"
But is there any way that you can unlock that extra equity?
Richard

[Wayne]

But is there any way that you can unlock that extra equity?[/COLOR]

Join with someone who has low equity but high income? No idea how you would find such a like minded individual that you can work closely with.

[Ahar]

Hi
Now that I understand that you can be in my situation where..."serviceability will become limiting as opposed to LVR"
But is there any way that you can unlock that extra equity?
Richard

Rent your house out and go flatting........this will increase your income......then in say 6 months or so move back in ....bank doesn't need to know


Banks typically will take 70-80% of rents and add to your job income when calculating servicibility.

But note, they don't add in anything for flatemates/boarders.

Join with someone who has low equity but high income?

Not fond of this idea.....tainting and all that makes me very nervous

Obviously I have "trust issues"

[DBrown]

"trust issues"

I think I would also find myself with "trust issues" in this situation.

[flyernzl]

Most people believe that a 'reasonably good income' is around 15% - 20% more than what they themselves are paid - no matter how high that is.

The same as most people believe that 'old' is 10 years more than what they currently are.
To a 20-year-old 30 is elderly, to an 80-year-old 90 is getting on a bit.

That is why Labour often has problems after they get into power promising to raise taxes on high income earners.
School Teachers/Wharfies/Public Servants vote them in on this manifesto and are then shocked and astounded when their own taxes are increased.