Many people nowadays enjoy the idea of diversifying, and along with having their own home loan, they enjoy taking on other investment properties.
Sometimes these investments can be purchased with a parent, relative or friend.
An important thing to know, is that most banks will calculate that you are theoretically responsible for repaying the entire loan you have taken out with your family member or friend, when assessing your ability to expand on your own home loan or individual investment portfolio.
This can have a dramatic impact on the amount that you are able to borrow on your own, or with your husband or wife. You had a great idea to expand your investments by going halves with another strong income earner, and may not even realise that many banks will view this as a way to dramatically reduce your borrowing capacity.
Thankfully, there are a select few number of banks that will in fact take on your share only of the shared loan repayments, when assessing your ability to borrow for future loan increases.
So if you and your brother have a mortgage of $1500/fortnight, and your share of repayments is $750/fortnight, make sure that when you approach a bank to work on your own home loan, or that held with your husband or wife, that they count your share as $750/fortnight. As the majority of banks will calculate your borrowing capacity based on you having to prove that you personally can afford to pay the entire $1500/fortnight, even though you are actually only responsible for paying half.
Not only that, but the same banks that want you to prove the above, will only let you use HALF the rental income for the property when proving your income.
If you want to maximise your borrowing ability, and want to use a lender that has an approach to shared investments that actually makes sense, than contact Bee Finance Savvy on 1300 140 554, or email us at email@example.com
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