Home – New Forums Money matters A girl changes everything. Home loans and lending power.

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  • #987577
    jjbrians
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    Long time member, however I’ve signed up for a new account just for this post as I’ll rather stay a little anonymous.

    Like a silly young person, I blew my credit rating when I was silly teenager, the typical stuff: unpaid telephone bills, not paying bills on time, etc. While I’ve paid the debts off (long-long ago), I’ve vowed not to put myself into a position where I’ll ever owe anyone money ever again. I still don’t own a credit card and myself personally and my business don’t have any creditors whatsoever, and never will.

    For the past few years, I’ve been saving money to buy a house. I currently have $300,000 of savings. I was planning to spend around $250,000 – $300,000 on the house and put $50k or so into renovations. However I’ve proposed to a country girl, and she’s said yes! She’s changed everything.

    I’ve been trying to find a real estate agent that I can trust to help me with all this, however from my own research what she (and I) want is probably going to set me back around $600,000 – $750,000 dollars. $500k for the property, and $150k or so for loose ends (equipment, fencing, sheds, electricity hookups, etc).

    Does anyone have any suggestions on what my options are? With a shot credit history, if I walk into a bank with $300k on the table and being self-employed, is borrowing say $450k ($300k+450=750) a pipe dream? How will a bank assess my lending power?

    Preferably I don’t want the bank having anything to do with my business. I also don’t want them sticking their noses into my records. Can my soon to be wife (who is full time employed, earning 80k/year) solely apply for the loan in her name only? And I just give her the money so she can use it as a deposit keeping me 100% out of the picture?

    #1163419
    TehCamel
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    I’m not a mortgage broker.

    you’re talking about having 300K of a 750K purchase (Actually, make it 800K, add your stamp duty and transfer costs etc, unless you already included that)

    that’s a 40% deposit. It’ll get you alot further toward that goal than having only 80K or 160K

    so what it comes down to now is your serviceability.
    Basically – on the 500K you’re borrowing, at 7.5% for 25 years, using a very simple calculator, your loan repayment is estimated at 3700 a month.
    so the bank will look at your income (actually, both of you, since i assume you’ll buy it in both names) and decide using their own internal calculators, what percentage of your net income that would be.

    if you have a combined net income of say $10K a month, and no other debts, I’d assume you’ll romp it in.

    where it starts to get tricky is how your self-employment works. If you’re running a company and paying yourself a salary, it’s mostly ok. If you’re a sole trader with variable income, it might be a bit harder and you’ll need things like cashflow forecasts and P&L summaries for 2 years.

    you can give her the 300K as a deposit, yes. Although the bank might say it’s not evidence of genuine savings.. depends.
    And obviously if she borrows the full amount, it’ll all be in her name

    best bet would be to speak to a mortgage broker. they’ll be able to tell you the best options.

    #1163420
    MissSassy
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    You need to speak to a mortgage broker, your credit history may be so long ago that it does not matter any more.

    You have a huge deposit and assuming you have a fews years good trading history you may well get a loan over the line.

    A broker will know the best options available to you – you may just be pleasantly surprised.

    #1163421
    jjbrians
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    Thanks for the advice Andy and Kelly. I’ll definitely be approaching a broker, just trying to get some ballpark advice so I don’t come across as completely clueless.

    TehCamel, post: 189033 wrote:
    Where it starts to get tricky is how your self-employment works. If you’re running a company and paying yourself a salary, it’s mostly ok. If you’re a sole trader with variable income, it might be a bit harder and you’ll need things like cashflow forecasts and P&L summaries for 2 years.

    Yeah, this is what worries me. I’m essentially on a below minimum salary and pay myself 15-20k/year and savings paid out to my trust where my accountants deems it makes financial sense. I’d estimate for the past 10-years, 75%+ of my expenses have been paid directly by the company. I live a simple and inexpensive life, have cheap hobbies, so never really had a reason to pay myself anything more.

    #1163422
    jjbrians
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    Repayments will also never be a problem, I’m also planning to pay the loan off in 10-years max as a worst case, but will aim for it to be paid off in 5 given I’ve been 100% comfortable with saving $50k/year on average.

    The reason why I don’t want to introduce the company into the fold is purely because I really don’t give a hoot about money. Any bank looking over our financials is going to give us a puzzling look, hell both my business adviser and trusted accountant think I am the craziest person on the planet.

    Half the time we don’t even bother to invoice clients and looking at what we write off each year is going to raise some puzzling questions. We also own a few completely non-related failing businesses that we pump money into, not because I want them to turn a profit, but because I find what they do cool and exciting!

    The company is run very oddly. I’ll literally spend a year or two purely working with non-profits and not charge them a dime (even after we’ve signed contracts/etc agreeing to certain amounts) as I’ve fallen in love with their efforts and seen first hand their struggles. Than, another year I’ll work on a few big projects for soulless entities that will net us a small fortune. We turn down project after project on the basis we’re “busy”, but in reality it’s because I only pump out a project every year or two to keep the accountants off my back and I go back to doing what I enjoy which is basically helping and making a difference with my expertise and not giving a hoot amount money.

    The second I need to raise money, it’s there. No problem. If I really wanted to, I could put my head down and work my ass off for a year and probably come up with the full amount upfront – but that’s not me, and not the reason my partner is marrying me.

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