Hi, Could anyone give us their ideas on the following: would a retired couple (65, 67) qualify for a loan to accomodate a property wrap (vendor finance – buyer already in place). principle place of residence is paid off (with the exception of a withdraw facility up to $50.000, of which 30.000 has been used (bought caravan – grey nomands Income coming in is 2 regular old age pension. No further debts.Would the fact that we already have a buyer in place willing to enter the contract (plus our regular income/pension) satisfy the bank with regards to servicibility of the loan?Thanks, Regina
Regretfully i think you will find the average Bank will run a mile as soon as you mention to them that you are wishing to purchase a property to onsell by way of an instalment contract.
Do either of you hold an ABN as a lodoc 60 loan might be a consideration. Other than this i think you will struggle.
On a separate note have you carefully considered the implications of buying the property and finding that the buyer does not make payments to you and refuses to leave the property (I am assuming that you the buyer is not a family member or close friend) and you are unable to service the new debt.
Richard Taylor | Australia's leading private lender
Thanks for your comments. There is actually family involved in our scenario. The pensioners are my parents and they are willing to help us get a foot in the market. They own their own home and are whishing to move to a smaller home with less maintenance.
As we are aware of the possibilities of vendor finance/property wraps (we are intending to build up a property portfolio ourselves), we were wondering if this would be a safe enough option for my parents.
Rather then just selling it (and having to endure marketing fees for the sale) they would rather have us move into their home and move into a smaller home themselves. Hence, they would like to do a vendor finance deal for us, which will pay for their costs involved for their new home.
We in our turn can then pay out the loan, once we're able to finance ourselves. (due to a previous business going into liquidation my husband has a blemished credit record).
I think i would be getting them to contact Centrelink first and see what effect this will have on their pension entitlements as they will be increasing their income.
They would still be better in you buying the property off them even if the lodoc 60 loan was placed in your name solely and leaving a 2nd mortgage on the property rather than vendor financing the whole deal.
Either way they need some proper advice first.
Richard Taylor | Australia's leading private lender
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