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  1. #1

    Default Serviceability and LVR

    Hi,

    Just checking I have the right idea with serviceability with multiple properties,

    Total Loan repayments/Gross income=30%

    Gross income = My income+75% of all rental income

    Does one banks serviceability take into account lending at other banks.

    Also with LVR, if your personal home is with another bank, say kiwibank and rentals with say ANZ, will ANZ calculate LVR including home at Kiwibank.

    Any advice appreciated. moving onto next IP, tried to arrange mortgage broker, to get some good advice, but had one not call me back, one who didn't know what he was talking about, and another were the only thing we agreed on was that we didn't agree with each other.

    Cheers.

  2. #2
    Join Date
    May 2008
    Location
    Torbay, Auckland
    Posts
    3,906

    Default

    Quote Originally Posted by jam_mack View Post
    Hi,

    Just checking I have the right idea with serviceability with multiple properties,

    Total Loan repayments/Gross income=30%

    Gross income = My income+75% of all rental income

    Does one banks serviceability take into account lending at other banks.

    Also with LVR, if your personal home is with another bank, say kiwibank and rentals with say ANZ, will ANZ calculate LVR including home at Kiwibank.

    Any advice appreciated. moving onto next IP, tried to arrange mortgage broker, to get some good advice, but had one not call me back, one who didn't know what he was talking about, and another were the only thing we agreed on was that we didn't agree with each other.

    Cheers.
    Yep there are good and bad mortgage brokers.
    I am sure you will get some recomendations on here.

    Mike Kingston from Mike Pero is very good, and I use him.
    But there is also Kris Pedersen he is very good.

    What you want is a mortgage broker who know property, not a home buyer broker.
    Any broker that suggests using your equity to buy your next property is dodgy.
    You want to revalue your current IP up to max value, and open up a line of credit for the spare funds to use as a deposit for the next.

    But suggest you do structures through a property accountant before you get a broker.
    Ross Barnett on here is very good.

  3. #3
    Join Date
    Oct 2011
    Location
    1/18 Seaview Road, Paraparaumu Beach
    Posts
    267

    Default

    Hi jam_mack, sorry to hear you have had a bad experience with some mortgage brokers. It does pay to deal with those who understand investment property. A look on their website may confirm this.
    Basically the banks will factor in the lending with other banks in the servicing calculator. But they will also use all your income across your personal and rental portfolio (rentals usually 75% of gross rent).
    A new bank will not mix an LVR position you have with another bank with its own security position. So in your situation ANZ will not factor in your LVR position with your family home as it doesn't have a security over it.
    Craig PopeCraig Pope Mortgages & Insurance
    www.craigpope.co.nz

  4. #4

    Default

    Hi,

    Thanks for the advice, I have a meeting with an accountant this week, I have 5 properties already(11% yield) , but in our own names, as I was looking at positive properties only, I was told it wasn't worth it. What do you think?

    Craig thanks for that, what seems to be the most limiting factor in people expanding their portfolio, LVR or serviceability? Also as a mortgage broker can you do better than the 5.99% that kiwibank are offering me for 5 years, aswell as 5.15% on my revolving credit?

  5. #5
    Join Date
    Oct 2011
    Location
    1/18 Seaview Road, Paraparaumu Beach
    Posts
    267

    Default

    Hi jam_mack
    That is a great yield! Often (but not always) with a yield that high there may be a 'negative' eg location, like Kawerau where capital growth may be limited. Or it could be multi unit meaning borrowing lending ratios may be limited. I try to go for a mixture of OK return and good location. But I also want properties close to where I live so that affects the return. So it really comes down to your personal preference. That's one great thing about this site as everyone has their own personal objectives and preferences, its what works for your and your risk and goal profiles.

    That's a great question re limiting factors. Either one (LVR v serviceability) has equal limiting factors. I have investors that have great cashflow income, but minimal equity, so their budget is constrained. Others have plenty of equity, but minimal income. For example, if someone has $400k deposit, but only earns $35k pa salary, their borrowing power will still be limited despite a big deposit.

    Rates are certainly a major part of what we do, as well as advice on structure etc. It depends on your personal circumstances ie LVR, loan size, serviceability. I have a strong deal I am signing up tomorrow where revolving is 5% (though 5.15% revolving is competitive) and 5 years is 5.79%. But again its all a case by case basis.

    Hope that helps
    Craig PopeCraig Pope Mortgages & Insurance
    www.craigpope.co.nz


 

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