Loan pre-approvals by banks can be confusing. They aren't a rubber stamp to buy whatever you want, but some buyers are being a little too cautious.
Minimum monthly dollars to invest in quality residential Melbourne property
Jarrod McCabe and Howitt Partners' Charles Howitt consider how much spare monthly cash flow is required to finance an entry level ($400,000) investment-grade property, based on the following assumptions:
- Investor borrows $400,000
- 100% LVR, secured with home
- Transaction costs paid up front with cash
- Mortgage interest rate of 5%, interest only
- Gross rental income of 3.5%
- 25% of gross rent allocated to management/maintenance costs.
They consider the result for a top-rate and second-tier marginal tax rate payer. You may be surprised at the numbers!
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