Looking to purchase a property as joint owners

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mayer
Posts: 49
Joined: Mon Jun 15, 2009 12:21 pm

Looking to purchase a property as joint owners

Post by mayer »

Hello everyone,

I’m a bus driver and I earn around $58,000 per annum. My wife is a draftsperson and she earns around $52,000 per annum. We want to invest in a house in Bourke as joint owners. We’re not sure how the banks will consider our application. Can anyone tell us how the banks will assess our loan?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Looking to purchase a property as joint owners

Post by Otto Dargan »

Hello mayer and welcome to the forums.

If you are buying a property as joint owners then lenders may assess your investment loan slightly differently.

Lenders may take the following into consideration:
  • One person having a high income may be able to compensate for the other’s inability to afford their share of the repayments.
  • One person having a good credit history cannot compensate for the other having poor credit. However, this may not be the case if the other’s income is not required to prove that you can afford the debt.
Credit scoring may generally be slightly more favourable than for a single applicant. Depending on the lender you apply with, the asset position of each borrower may be assessed differently.

Investment loans are generally a higher risk than standard home loans. You need to be in a strong financial position to qualify. Some of the basic lending criteria may include:
  • You may be required to have 5% to 10% in genuine savings.
  • Some lenders may want you to have equity in other properties if you are borrowing more than 90% of the property value. Lenders tend to prefer experienced investors.
  • You must have a good credit history.
  • You must have stable employment.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

mayer
Posts: 49
Joined: Mon Jun 15, 2009 12:21 pm

Re: Looking to purchase a property as joint owners

Post by mayer »

Hello Otto,

Thanks for the info. I think we can meet those requirements without much difficulty. Can you tell us how we can increase our borrowing power?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Looking to purchase a property as joint owners

Post by Otto Dargan »

Hi mayer,

You may be able to increase your borrowing capacity on the investment loan if you follow these simple steps:
  • Apply with a lender that has favourable lending criteria for investors,
  • Reduce your credit card limits,
  • Apply for loans jointly with your spouse so that all of your income can be used,
  • Buy positively geared investment properties, or
  • Fix your rate for three to five years.
Lenders have different methods of assessing investment property loans. Depending on your situation, your capacity to borrow may be increased or reduced:
  • Rental income - Many lenders may use only 80% of your rental income in their assessment. Few lenders may use 100% in some cases.
  • Other income - All lenders may assess your base salary in the same way. However, they tend to differ in the assessment of overtime, bonuses, commission, allowances, trust distributions, dividends, and self employed income.
  • Assessment rate - Most lenders may not calculate your borrowing capacity using the actual rate that you are paying. They may add up to 2% to the current rate to make sure of your ability to pay back the loan if the rate were to increase.
  • Existing debts - Some lenders may assess the repayments on your existing debts using principal and interest repayments although you may be paying interest only.
  • Negative gearing - All lenders may not take negative gearing benefits into account. If your portfolio is not positively geared then it is recommended to find a lender who can include these benefits in a serviceability calculation.
You can check out our website for more information regarding the matter. If you want to talk to us directly then we can be reached on 1300 889 743. You can also enquire online.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

mayer
Posts: 49
Joined: Mon Jun 15, 2009 12:21 pm

Re: Looking to purchase a property as joint owners

Post by mayer »

Wow, that was a very comprehensive answer! I checked out your website and it helped me understand even more. Thank you for taking out the time to answer my queries, Otto. I want to hire your services which is why I’ll call your office by the end of the coming week.

Good day to you :)

neonlights
Posts: 38
Joined: Fri Jul 26, 2013 7:04 pm

Re: Looking to purchase a property as joint owners

Post by neonlights »

Hey,

I’ve just finished paying off a home loan that I’d taken to purchase an investment property. I’ve collected all of the major documents I need to provide to my accountant. But I’ve been told that I might need to provide some additional information. Can anyone tell me what I may have to provide?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Looking to purchase a property as joint owners

Post by Otto Dargan »

Hi neonlights,

Your accountant may need some additional information aside from the income and expenses figures from your property documents. This may include the information regarding:
  • The address of the property.
  • The percentage of the property that you own.
  • The date of purchase if you have purchased it this year.
  • The date the property started earning rental income.
  • Number of days rented this year. You may ask your property manager for this.
  • Number of days used for private purposes.
  • A list of assets purchased and sold. This helps your accountant calculate your depreciation deductions.
You may also need to mention if you redrew any funds from your loan this year. If you want to learn more then you can go through our website.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

neonlights
Posts: 38
Joined: Fri Jul 26, 2013 7:04 pm

Re: Looking to purchase a property as joint owners

Post by neonlights »

I see… Thanks for your help, Otto. I'll give you a call as soon as I can to get some things clarified.

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