Hi All
I know since the crunch on the US market & uncertainty in the world a number of lenders have gotten a lot stricter and uncertain, there used to be some products that offered 110% and 106% borrowings to help you get into a home.
While not this extreme, I am looking for a loan that can provide 100% LVR (e.g. us not put down a deposit), and even better for it to capitalise the mortgage insurance into the loan if at all possible (that is assuming LMI is a requirement which I would guess it def would be).
Do these sort of loans exist still? My "long term bank" is the NSW Teachers Credit Union, their website says they will lend up to 100% LVR with mortgage insurance, however I know that their LMI company is Genworth & from memory Genworth hasn't approved us before due to not having held employment for over 12 mths and the areas we were wanting to buy in.
I have had a look at St George's No Deposit Loan but it has a whopping interest rate of 10.17% (crikey). Are there cheaper ones out there that we are likely to get approved for? Or is nothing going to happen unless we save a deposit.
We have 10k in savings but want to keep this after buying a house as our "emergency fund/contingency plan" (this will be a PPOR), we dont get first home grant as we have already owned). My wife & I both work full time earning approx 42k per annum each gross. We have a 10k car loan debt which is due over the next 4 or 5 years at $75 a week. Some calculators say we can borrow 400k but I am reluctant to believe them.
We are looking to buy a freestanding house in SE QLD, no more than 300k. Probably around the Beenleigh area.
Any suggestions on where to go to see if we can get a preapproval?? Does it look likely that we will get finance based on the above? We have both only held our full time jobs for approx 3 months since moving to QLD.
Thanks heaps all.
St G have a 100% loan with an option of paying no LMI but with a higher rate for 3 years. I beleive it is still available but you will need at least around 12 months full time employment to qualify
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
Hi Terryw
Thanks for the reply. 12 months is going to be hard press, my wife is in a Government temporary position which only has a duration of 6 months, I am in full time permanent employment (well,a 2 year contract)…based on this is any lender going to come to the party or is it going to be like trying to find a needle in a haystack?
Thanks
Finding a needle in a hay stack would be easier.
As Terry mentions SGB is an option but not with short term employment.
Richard Taylor | Australia's leading private lender
Temporary positions and contracting positions will make it much more difficult. you would even have trouble getting a 95% loan I am afraid.
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
Thanks for the feedback guys.
Is there any solution to this problem like going with a specific lender (even with a slightly higher interest rate), or anything you think we could do other than postpone purchasing?
We have both been in the same line of work (finance/admin) for the last 4 years with minimal breaks between employment- will any lenders consider a short current position history provided it is in the same industry as previous work history?
Would applying for pre-approval with several lenders such as SGB, CBAs 100% loan, ING etc have a detrimental effect on our credit rating if there is too many enquiries? We really need to be able to capitalise any LMI fees into the loan too which I dont know if that will be possible.
Last year we had a home loan of 200,000 which we paid back in full when we sold our house, and have also had a 20k loan which we paid back in full.
Is it worth using a mortgage broker to try and get preapproval/find a lender willing to let us borrow based on our circumstances or will the answer be the same with all lenders (a big fat no until more deposit $ and longer employment stability) regardless?
My last question, do the banks valuation of a property ever come back more than what your paying for it, or is it all slightly rigged to make sure they dont give you more money than they have to?
Thanks again
Update: We applied for the St George No Deposit (Quick Saver) loan, they came back saying we can easily service 390k loan based on our incomes etc,we only asked for 300k. but as my wife works in the Government on a fixed term contract, even though she gets paid by the government and not an employment agency and gets full annual leave, pub hols etc they cannot take her income into account because her contract ends at the end of Jan 09 and we can't afford the loan based on 1 income.
are there any lenders who recognise a contract position as an income? she is full time, and has worked in the particular industry for a few years – her last job was for 1 and a half years in the government and she only had 1 week break between that job and her current one. they don't seem to take any of that into account?
Is her contract likely to be renewed?
Hi,
Have you heard of vendor finance or a lease option. These have been around for years and are a great alternative. Vendor finance is where the owner of the house you want to buy lends you their money based on the value of the home, ie.they take out a loan instead of you, obviously for a slightly higher rate than they are paying. You can then either refinance in a couple of years when you qualify for a loan and pay them out or this can continue as long as you both like. The reason a seller might consider this is they can have an income stream and not have to pay capital gains tax straight away, particularly if they own the home outright.
A lease option is where you rent a place but have a contract that you can buy the place in the next few years at the price agreed on today. This also creates a payment history which you can give to the bank in a year or so which makes it more likely to obtain a loan. Also a small percentage of the rent is sometimes credited from the purchase price when you buy. You can check out http://www.urhome.com.au or google 'we buy houses'. Both these places do these kinds of deals. It's becoming popular for people like yourself who don't meet the neat little boxes the banks expect. You are not alone in your frustration. Good luck. Also a mortgage broker is more likely to direct you to an institution that will approve you. My husband is self employed and I work part time but we have a great mortgage broker here in melbourne who got us a loan for our PPOR.
MegThanks for the feedback. Gibbo- not likely to be extended (maternity leave contract), that said though she knows the end date and will have another job lined up to ensure no down time. We would have a contingency in place to be able to afford the loan but the banks don’t seem to take any of that into account.
Megs, thanks for that info, I will look into those ideas a bit further, I guess I would need to be very thorough if considering any type of those deals.
Hi Dammit
If your wife can prove her income from the past 2 years tax returns, it may be argued that she is self employed – and they may not be too concerned about the short contract, although for the 100% loan they may be more fussy. Its worth asking St G
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
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