I have read in various places that it is possible to obtain property without a deposit. I would like to clarify that I do not mean no deposit to the agent then have to make up the difference of what the lender will lend you, I mean as I put it, no deposit. I am not sure of the full details though and was hoping someone can fill in the blanks.
To my understanding it is possible to get finance on a property by getting a valuation of the proprerty that is in fact higher than the value so the 90% that gets financed actually covers all costs and you are out of pocket $0.00 I am not certain on the legalities of this or if I have the right idea. I do know on the other hand, 2 people that have bought properties and paid nothing to obtain them. Does anyone else know anything about this?
Hi marcus
There are a couple of ways that I can think of that this can happen. The first one is of course where you borrow against the equity in already owned properties, thus providing security for the banks to lend the full price.
Another way is to purchase off the plan, and after one year, most lenders seem reasonably happy to lend on valuation if it is higher than purchase price.
You can also buy on a longish settlement which achieves the same as above, or buy and renovate prior to settlement. I think this one has a harder time getting past the banks.
On exchange of contracts, you do have to hand over either some cash, or a deposit bond (which does cost $$$). It may be as little as $100, or could be a car or something similar (it’s called ‘consideration’ and doesn’t HAVE to be cash, but the agents will push for it)
Cheers
MelThere are a couple of ways to do this.
1. Listing price of property is $100k, you negotiate with vendor to buy at $80k. $20k equity to be used.
2. 2nd mortgage from vendor
3. As Mel said Off the Plan
4. As Mel said Long settlement
5. Use your super.
Also, you can get away with no deposit to agents. Generally, when you are using these tactics, real estate agents know the status of the offer, therefore let the deposit slide. Although, as a broker they probably let my clients off, as they (real estates) are constantly updated and assured of the sale going to settlement.
If you want full details on how,email me.
Can anyone help ?
We need to get some advice on how to record a rebate from a vendor.
Here is an example-:
Property cost is $ 350,000
I did a valuation it’s $ 340,000
Paid $1,000 deposit and signed contract
contract has gone to bank.settlement in 60 days
7 days later vendor comes to me and wants to settle in 55 days, needs money.
did deal to give rebate of $40,000 if I settle earlier.
He signed an adendum to state this.
Do I need to show bank this or should I just show conveyancer and let her adjust at settlement.
I have approval in writing from bank for this loanJust take it to your solicitor or conveyencor, they will disburse funds correctly. Just make sure you make it clear to them, that, this is a highly important part of the transaction. Keep reminding them.
That’s great
But the bank is lending on $350,000 not $310,000
But if the bank doesn’t know I hope it’s legal.[/quote]There are a couple of ways to do this.
1. Listing price of property is $100k, you negotiate with vendor to buy at $80k. $20k equity to be used.
2. 2nd mortgage from vendor
3. As Mel said Off the Plan
4. As Mel said Long settlement
5. Use your super.
(Gee I’m messing around to put this quote in, dunno how to do it properly. I pressed the “insert quote” button, then copied and pasted the quote, the letters don’t seem to change like they should, is there a better way???)[
]Picja1, I thought you couldn’t use your super for this, are you sure?
I’m interested to find out how to do this, since I thought super was ‘untouchable’ till you retire?
My husband once asked our accountant if he could use his super for property investing and was told this was not possible.Hi Celivia,
On the screen, where you write your reply post, under all the little funny icons. Click on Forum Code and a list of forum codes that are available will appear and steps shown in how to insert them.
cheers,
s.i.sQuote:There are a couple of ways to do this.1. Listing price of property is $100k, you negotiate with vendor to buy at $80k. $20k equity to be used.
Picja,
In this case what purchase price will the contract read?
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
It doesn’t seem to be clear how option 1) above will work. You say buy at 80% of value and you have an instant equity of 20% – but I thought the banks will only lend on the lower of the contract price or the valuation?
Maybe the way its done is to get a long settlement then the banks will look at the valuation price instead???
Hi
I know of one lender that will lend on valuation if higher than purchase price, but the max LVR is 70%, so it has to be an extremely good deal to get 100% finance.
Many people use rebates, like in Smiley’s example. You would technically be required to inform the bank of the details. Some people consider it fraud if you don’t, others say you are just giving the bank what they ask for (usually just front page of contract-so they don’t see the rebate).
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I thought you couldn’t use your super for this, are you sure?
I’m interested to find out how to do this, since I thought super was ‘untouchable’ till you retire?
My husband once asked our accountant if he could use his super for property investing and was told this was not possible.Celivia it can be done, but as with most good ideas it is not simple or straight forward.
Need to:-
-set up own Super fund,-transfer current super to new fund
-by property tennants in common or thru unit trust etc.
Problem is S/Fund cannot borrow so you cannot use the equity in the property to fund the debt (although we have had a debate on how to do this, and it may be possible to trick the system, relying heavily on non disclosure ) Mention this to your accountant or get another one.[
]gmh454 I disagree that super funds borrowing relies on non disclosure.
You can do it, it’s just difficult for the bank/lender to agree to what would be required.
Cheers
Mel
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