How would a broker assess borrowing capacity for a $1.4–1.8m lifestyle property?
I’m hoping to get some perspectives from mortgage brokers on how you’d approach our situation.
My husband and I are both in our mid-40s, PAYG, with combined gross income of around $330k. We have two dependent children and no HECS debt.
Our current position is roughly:
-PPOR worth ~$2.2m, with only ~$27k mortgage remaining (effectively offset)
-Existing investment property worth ~$900–950k with ~$213k debt and rent of ~$560/week
-Substantial superannuation
-No other significant debt
We’re considering buying a second property in a hinterland/coastal area, less than two hours from where we live and around 20 minutes’ drive to the beach. We’re looking at properties in roughly the $1.4m–$1.8m range.
This wouldn’t be a conventional investment property. We’d want it primarily as a family/lifestyle property — initially we’d probably use it for around four weeks a year, potentially increasing that over time. When we’re not using it, we’d look at making the main house available for short-term accommodation.
The type of property we’re considering has a large main house plus a separate self-contained accommodation area. We also have the possibility of having a family member live in the separate accommodation and help with basic caretaker/cleaning responsibilities.
I’m not interested in maximising borrowing capacity. What I’m trying to understand is what would be a sensible level of additional debt for us while retaining a substantial liquidity buffer and financial flexibility, particularly with two children still at school.
A few questions for brokers:
Given the above position, how would you approach assessing our additional borrowing capacity?
How different would you expect our maximum serviceability to be from what you would regard as a sensible/comfortable borrowing level?
How would a lender treat the existing investment property’s rental income and debt?
Would projected short-term rental/Airbnb income from the new property be considered for serviceability? If so, how much weight would you normally give it?
Would the fact that the new property is primarily a lifestyle property/holiday home create any particular lending issues?
Would you be looking at a different lending structure because we have substantial equity in the PPOR but very little existing PPOR debt?
At what point would you start to regard the overall debt position as unnecessarily aggressive, given our income and family commitments?
If we were looking at, say, $1.4m vs $1.6m vs $1.8m, would you approach those scenarios materially differently?
I’m deliberately not including a potential family contribution in this scenario — we’re assuming we need to make the purchase work entirely from our own financial position.
I’m interested in how an experienced broker would actually think about this, rather than simply being told what our theoretical maximum borrowing capacity is.
Thanks in advance.