Low income investing options
Question from vicki updated on 31st July 2017:
Is there any way for me to buy another property to live in and do up? I’m itching to do something like that which I can sink my teeth into.
My current situation is as follows: I own the one bedroom unit that I live in. There is no loan on it and its value is about $220,000. I also own an investment rental with long term tenants. It has a $309,000 interest only loan on it and is valued at around $500,000.
I gave up full time employment recently and I'm using my savings while I enjoy life and pursue my dreams. I also have another interest only bank loan of $45,000 which the investment property pays for.
Ideally, I'd like to keep both properties and maybe rent out my home. I don't have any desire to sell the investment property. I also don’t plan to get a full time job. I can pick up work if I want but the plan is to stay semi-retired and see what happens.
Our expert Kris Pedersen responded:
You are limited without more income. There used to be what was known as no-doc or low-doc options for this scenario. They had pricing at or close to bank rates but they have basically disappeared since the GFC. You will see some products marketed under these titles, but the pricing tends to be a few percent above bank rates with many of the products more targeted for short term lending solutions.
One option you could look at is a joint venture where you bring on someone who has income and combine your position. This might allow you to buy. But be careful in regards to this and make sure you take advice from a lawyer if you go down this path.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz