Anyone know of what brokers i could contact that finance on property zoned 'business 1' which can be converted to residential?
Jaffa
Business 1 is a broad zoning. Tell us more about it and i might be able to help.
Richard Taylor | Australia's leading private lender
Well Richard it's a vacant shop zoned business 1 that upon council approval in some three or more months and renovations completed a certificate of occupancy will be granted. Then it can be lived in as a residential.
Ok couple more questions:
1) What is the purchase price.
2) How much deposit would you have. Regretfully you wouldn't get LMI so max LVR would be 80% on a standalone basis.
3) Can we substantiate income
4) Where is the property located.Richard Taylor | Australia's leading private lender
The Contract of Sale of $38,000.00 is subject to and conditional upon the purchaser obtaining a Planning Permit from the council authorising him to use the premises for residential purposes.
36% Deposit.
I will have LVR of 64%.
Yes i can substantiate income in the form of bank statements and income statement.
The property location is 3300.
Jaffa
At that purchase price i can only assume the property is small in size.
Sorry but i think if you are after a lodoc loan for $24K you will struggle especially at anything near an interest in single figures.
Richard Taylor | Australia's leading private lender
Jaffa, if I understand correctly that settlement only occurs after permission is obtained to occupy as a residential premises, then you'd have to have a shot at a residential mortgage, wouldn't you? Talk to a good broker – I suspect there are lenders around who "if it looks like a home and can be occupied as a home" will let you borrow on a residential basis. Emphasise that it's a home that happens to have formerly been used as a shop; don't describe it up-front as a "business 1" property.
It's a home that happens to be on land that was formerly used as a business ; )
Good luck,
Tracey in Brisbane
That's right Tracey thanks for your suggestions. Settlement needs to be while it is still business 1 then a month or so after the renovation is completed council issue a certificate of occupancy which it can then have a home loan secured against it. This is where I assumed bridging that gap between settlement and receiving that 'certificate of occupancy' would require a business loan.
I had a meeting with the NAB and the manager came to sit in on the meeting explaining that it could have a business 1 loan first then converted over to a standard home loan with the $600 application fee waved on the mortgage and a $600 application fee on the business loan. They we're all positive and extremely helpful on finding a way ahead with this.
Just before Christmas i arranged a meeting with a broker. He is a first cousin and ex Westpac Bank Manager of 18 years that is now running his own brokering from his home. We chatted away at length out on the street having a coffee and he suggested bridging the gap with cash then applying through the Commonwealth Bank for a home loan using the certificate of occupancy.
I'm shopping around to get peoples opinion and suggestions on what options i can take before i make a decision on what way best to go. Forgot to mention that I have a garrantor if necessary.
Jaffasoft wrote:The Contract of Sale of $38,000.00 is subject to and conditional upon the purchaser obtaining a Planning Permit from the council authorising him to use the premises for residential purposes.OK, I did misunderstand; how is settlement happening before the permit, if the permit is a condition of sale:?
Perhaps I've got to read this yet again.Anyway, I'll revert to what I was going to suggest: if you can possibly do it, as this isn't a huge amount of money, use cash, credit cards and personal loans to settle, then go for a standard residential mortgage once you get the permit and pay out the credit cards and personal loans at that time. The advantage of doing it this way is that 1) it's low hassle in terms of applying and getting the funds quickly, and 2) you don't have to find a lender willing to do a short-term business/commercial loan, who'll (understandably) probably try and lock you in for your residential mortgage by creating exit barriers such as fees (and that lender may not have the best deal).
Best wishes, Tracey in Brisbane
Jaffa
What is the size of the property in Sq M ?
Richard Taylor | Australia's leading private lender
The building area is an open 82.8 square meter area. The whole property area in square meters including the rear yard is 180 square meters.
Jaffa
What is the size of the property in Sq M ?
Richard Taylor | Australia's leading private lender
Qlds007 wrote:JaffaWhat is the size of the property in Sq M ?
Jaffasoft wrote:The whole property area in square meters including the rear yard is 180 square meters.What would be the best way to leverage into a property purchase number two (just thinking ahead now as well)? In the last hour i have organized that i can pay $24,000.00 cash and get a personal loan of $14,000 which i could pay back over the next 3 to 5 years interest free though this does not prove a credit rating. Either way i want to pay down this loan as quick as possible.
What did you think Qlds007?
Is it wise to use cash for this or should i hunt around knocking on all the doors i can to try get a home loan?
Cash sounds like the way to go.
Richard Taylor | Australia's leading private lender
Why is cash the way to go? I thought investing was about borrowing money and keeping cash reserves for other investments. NAB rang up to say yes they will lend $26,000.
Ok If NAB will do it then take a loan against the property.
Richard Taylor | Australia's leading private lender
I'm back to square one as I new NAB had agreed to lend against the property prior to submitting this post.
The problem with this amount with brokers..I imagine… is it's too small amount and they want to 'pass the buck' they think, "bugger that" because the commission is not an attractive amount to earn for helping people. I guess the financial institution that the broker takes the application to also says we don't want to lend money of this small amount and it sends their risk profile into a paranoid spin as well as the broker worried he's not doing the institution any good bringing them in small pathetic worthless applications.
Would have been a different story of it had been a $338,000.00 number. 36% deposit is plenty enough. LVR is better then they need. Serviceability is easily sufficient. And the postcode is fine.
Who are lenders that are no quiet so selective to look at that lend these smaller amounts?
Jaffa
No offence but commission on an $18000 loan depending on the aggregator may even mean the broker is making a loss and actually costing him money.
The financial gain has little to do whether as a MB i would ever do a deal however for a commecial style loan under $50K i am not aware of too many lenders who would be interested in taking up the proposition.
The management of an $18,000 deal is the same as one for $180,000 and hence lenders are not interested in the smaller amount. it is the same reason many of the Professional packages offer interest and application fee discounts over a given loan amount.
I am unsure as to what your issue is. You appear to have had an approval from NAB at i assume a residential rate. I do personal loans for more than 18K and charge a lot more than housing rates so i think the deal you have is very good.
Richard Taylor | Australia's leading private lender
Perhaps I've got to read this yet again.
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