Please advise how applicants being property developers is a high risk occupation to mortgage insurers ?
Hi Joseph – please clarify what you mean. I work in the field of property development but couldn't quite understand what you were asking.
How would mortgage insurers view applicants if they were working in the property development field ?
Joseph very simply.
1) If you are realting to financing of an owner occupied or investment property then like any self employed Profession they would look at 2 years Tax returns and work off these. Good track record never goes a miss.
2) If you are looking a mortgage insuring a development then it is simple they wont do it.I financed 187 wrap properties with the wrap income forming a large part of the Companies income and whilst it had to eventually go to National Acceptance level with the Bank concerned we had no problem. Property Development is just another occupation if presented correctly.
Richard Taylor | Australia's leading private lender
Might the mortgage insurers decline a application with the applicant being a property developer as his income from the sale of properties is based on speculation and as a result they may lose money on the sale of properties if their is a market downturn ?
Please advise.Thank you.
Joseph
Not at all if a good track record is in place. 2 years TR's with a list of projects and you should be fine.
Have financed many a PD and earn a fair bit of my annual income from doing just that.
Richard Taylor | Australia's leading private lender
Thank you Richard.
Some lenders/LMI do not like 'developers' at all. RAMS is one. I had people who had developed 6 houses and sold 2, they wanted to refinance 2 with RAMS who rejected it as they were 'developers'.
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
Totally agree more with Terry.
It is all dependant on the lender and whether it is a full doc / lodoc loan, the security and whether you have a good track record and the property is for owner occupation.
Richard Taylor | Australia's leading private lender
The other issue for lenders is the point at which the line is crossed from residential lending to defacto commercial finance. You'll find that some draw the line more conservatively than others.
I am currently in the process of trying to get a development loan. My mortgage broker is fantastic and has always come through for me in the past.
But none of the lenders want to touch me. I am a full time property developer with my company making well over $100,000 in its second year of operation. My husband and I have about 1.5 mill in equity and we live off the company's LOC which pays our salary. Our LOC is maxed out due to buying properties outright and paying some very hefty deposits.
I am building three houses on a community titled block of land that the company has bought outright. I can't even get a bank to lend me money against the land, let alone a development on it.
At this stage I am having to LO Doc the mortgage on the land and then either get presales on the houses or go to a private lender.
I am having nothing but trouble getting money. The banks never have any problems with assets – they continually talk about my "lack of servicability".
Just my experiences.
Cheers
K
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