To LOC or Not to LOC

Hi Dan

On the valuation subject, you need to take more charge of the valuation process.

Personally when I have a property of mine revalued, I compile a full due diligence kit on what I feel the property is worth to hand to the valuer.
You do need to chat to the valuer beforehand to see if he is receptive to your supporting data, otherwise you’re wasting your time.

We are seeing at the moment that the major banks are sending more business the way of the more conservative valuers, so you need to find out which valuers are on your banks panel, and employ them yourself getting the valuation assigned to your bank(if they will allow it).

On your question of changing your STD Var to a LOC, you will have to speak to your own bank about that regarding their fees etc, but they will need to set up a new loan a/c. It is not as simple as converting it over.

Good luck!

Brendon

Danw,

Comparable sales, for similar properties to yours. Try to get addresses and actual price. (Digital photos if possible)

Look at current sales in your area and go through OFI, take some photos and record either auction result or PS.

Try and make those references which are higher than yours. eg if your PPOR is worth ~ $500k, try and get properties which have sold for $510-540k plus.

This should be a start.

James

LOC = Line of Credit

Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

First question, who did the valuation? Did you pay a valuer? Did your new lender do it or did your existing lender do it?
Internal valuations by banks are notoriously conservative. I refinanced a house and had it valued by a valuer on the panel of many lenders $285,000. Westpac valed it at $165,000.
If you want to refinance with a different bank, arrange the property valuation yourself (normally around $300) find out from the valuer (before you undertake their services) which lenders accept their valuations.
A word of caution, due to issues relating to their professional indemnity cover, valuers generally are more conservative when assessing a refinance than a purchase. Their reasoning is that the purchaser (willing buyer) has set the price and they are simply confirming that price is realistic. With a refi, generally owners believe their house has increased more than it really has and are sucked in by agents who try and buy a listing by suggesting an over-inflated sale price (usually 10% more). Also as they is no willing buyer, valuers will err on the side of conservatism so as not to leave themselves in danger of legal action from overstating a property value and all of its consequences.
Finally, if a valuer gives you a lousy val (remember its only their opinion) under a refi situation. Get your sister/brother-in-law/friend/whoever to enter into a purchase contract for what you consider to be fair market value, pay for them to get it valued. Then mutually agree to terminate the contract, approach the lender to do a refinance and nominate the same valuer who valued it for the sale that never proceeded. (you might have to tell the valuer that the contract fell over, so you decided to just refinance instead). Once they have put a vslue on a property it is very unlikely that they will change their mind (unless they can prove its value is overstated). The games we have to play sometimes to get a fair go….

i got a valuation done 3 months ago, as the block of units are unique to the street, there was no information. i then did research on the area, same number of bedrooms, area size etc. handed it to the valuer (who didnt care) valuation came in 150k. three months later place has been revalued through a new bank valuation 195k!. i hadnt done any major changes etc. quite suprised by it as i was only hopeing for 165k. at the same time i had a valuation done on an IP in darwin, CG for the area (Larrakeyah) was around 12% for the last quarter. the place was valued only 2k more than i bought it for!
so i guess my advice would be to find a good mortgage broker who can help you get a fair evaluation.
shaun

Lead, Follow or get out of the bloody way

BigMikey, have you done this before?? Sounds great in theory…hopefully in practice too….

(Do you mind if I use this one??)

James