A seasoned investor hit a snag when attempting to add a fourth property to her collection; her broker said she’d maxed out her borrowing capacity. Despite this, her portfolio was healthy, with a strong 60% LVR. We switched her loans to Interest Only to improve cash flow and connected her with a non-bank lender that recognized her rental income potential, enhancing her borrowing power. Our strategy led to a profitable interstate property purchase and plans for further expansion into her SMSF, underlining her investment acumen.
An ambitious property investor was aiming to add a fourth property to her impressive portfolio. However, she hit a roadblock when her current mortgage broker told her that her borrowing capacity was fully utilized. Upon reviewing her property portfolio, it became apparent that equity was abundant, with a solid 60% Loan to Value Ratio (LVR) in her holdings.
After a thorough analysis of her financial situation, we shifted all her loan repayments to Interest Only, significantly enhancing her cash flow. To facilitate her property acquisition, we introduced her to a non-bank lender, known for their flexibility and favorable terms for property investors. This lender acknowledged the full potential of her rental incomes, applied only a minimal loading on her existing Interest Only repayments, and worked with a lower benchmark for living expenses, thereby boosting her borrowing capacity.
The strategic financial restructuring and lender switch facilitated an interstate property acquisition worth $563,000, boasting a robust 7% rental yield. This fifth addition to her portfolio not only solidified her status as a savvy investor but also fueled her confidence and provided clear guidance for future endeavors. Within the next 12 months, she plans to acquire two more properties, and we’ve laid out a strategic plan for her to delve into investment through her Self Managed Super Fund (SMSF), opening doors to even more opportunities and financial growth.
Our self-employed and contractor clients seem to get the run around from their banks when they are trying to get a loan to buy their own home. Quite often, they get bounced around from bank to bank only to be told ‘no’ – or they need to go down the low doc path, which involves higher rates and fees.
There is a distinction between a contractor and being self-employed, so this is reviewed on a case-by-case basis.
This example looks at a couple who runs their own successful café, but had to jump through hoops when they went to the bank they already do all their business banking with.
They have been running a thriving café in the suburbs for the last three years and were now ready to buy their own home. The business was performing well and they felt confident to now take on a mortgage.