ive been seeing people who are purchasing propertys which are under the valuation amount when it comes in and im just wondering how this is dealt with.
If a person buys a property for 80,000 and valuation comes in at 100,000, this extra 20% would be equity? could you use this in structuring your loan to say pay no deposit on the property and have a LVR of 80% or if you wanted to do this you would need to revalue the property and could used the additional $20,000 into a LOC which could be used for another property purchase.
As an investor would it be wise to keep buying propertys which are being valued more than purchase price or arethere issues with it?
Thanks guys…
Banks generally lend only on the contract price or the valuation, whichever is lower. So in this case they would only lend x% of $80,000. Once it is settled, then the client could apply for an increase, but many lenders want 3 months time lapse before allowing this.
In some circumstances it may be possible to get the loan based on valuation, but this is rare. Once exception is if there is a 12+ month settlment.
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
thanks terry,
i sort of imagine that could be the issue, but if you waited 3 months after settlement and refinanced i think that would be a fairly good situation..
however i imagine you would have to ensure that you signed up with a lender who offered minimal exit fees for when you refinance, or if you re finance with the same lender exit fees wouldnt apply?
No Dave you would stay put with the same lender so that exit fees didnt apply.
Just remember it would depend on whether the valuer agreed with you that the property had gone up in value.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New 100% Shared Equity scheme coming soon – Email us for details.Richard Taylor | Australia's leading private lender
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