In this weeks episode of Ask Kevin Young, Kevin and Jake answer Alan’s question about his daughter…
‘My daughter has saved $25,000 with no debt and earns an annual income of $30,000, but she has only been offered $132,000 from the bank. How can she successfully get into property?’
In this instance, the barrier to receiving a larger loan is a result of your earning capacity. There are a couple of solutions that Jake, the President of The Young Investors Club recommends in the video and below.
1. Look at purchasing a property together with someone, ie: family members. Since you already have a deposit figure (usually the roadblock for most young investors) a second income and assets will greatly assist your borrowing capacity and confidence in your chosen lender. Keep in mind, the guarantor is usually able to assist with you obtaining a higher lending capacity, the guarantor can always be released conditional to your finance.
2. If option 1 is not available, another option is to look at picking up a second job OR even looking at another job to assist with your income capacity. Again, this will provide increased capacity and confidence in your lender.
In saying this, Jake tends to think that $132,000 capacity seems a little low. It’s always best to shop around given low-interest rates and an abundance of available lenders.
Overall, there has never been a cheaper time to get yourself a new property, close to the city, public transport and proximity. It’s cheaper than you think and historically, prices always rise.
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