Hello! Almost a year ago we moved to a new town due to a work promotion. Although we have always planned to stay in the new town, we decided to rent first while we became familiar with the area. We planned to purchase in the first half of 2010, now we have received news that we need to vacate in January when our lease expires. Having both moved house many many times and wanting to avoid finding very temporary rental accommodation we are trying to see if we have any options to purchase earlier. We can also see the prices rising on the properties we are interested in and are concerned about missing the market. In the previous rural town we left our PPOR – which was bought only a few years ago as a ‘renovator’s delight’ (before our plans changed) – although it was never intended for this purpose we managed to get it rented out. The last bank valuation on the house was over 2.5 years ago at 225k. We have just under 190k remaining on the mortgage. It is currently rented out at $225 pw.
Recent discussions with local agents have suggested putting it on the market at 260k.
Of course we don't know how long it will need to sell, and don't want to have a fire sale due to our current situation.
Our plan had been to put the house up for sale soon and have it sold – leaving us with a cash deposit (and time to save some cash) for when we went to purchase a new PPOR in 2010. We just don’t have the cash deposit – due to using up savings for major medical expenses – just now. Ideally in our new location, we’d be looking at an asking price of less than 380k. Our income – his full time and my part time – is over 115k gross a year. So servicing the mortgage won’t be a problem…we just don’t have the big cash deposit right now. I am wondering if we have any options to help us avoid moving again to another rental property, and purchasing that PPOR before the end of year? Thank you!
B x
1. Get the current PPOR revalued by bank and see if they will lend you $18,000 based on a $260,000 valuation at 80% LVR equity Loan.
or
2. Set up an offset account on current PPOR and get all your wages put into it. Save as much as possible until you need to buy new PPOR. This reduces the interest charged on the 190k loan while having the cash on call to use as deposit. .or
3. manage to get vendor to lend you the deposit – known as Vendor Finance.Have a chat to your broker, you may be able to free up some equity in your house (if you're lucky but you are already over 80% – you may need LMI).
You may seek to refinance on the basis that the existing house is only slightly neg geared (and not a drain on your income) and you are already paying rent. Consider what the broker says.
Any interest on the money that you borrow for this house is unlikely to be tax deductible as is is you ppor.
Hmmm……
Interesting, thanks guys!
I should mention that the current mortgage is with ING.
Oh boy, we really would like to purchase and avoid renting again!
Thanks!
B x
Oh….I should add, yes we would sell the property in the previous town in a heart beat….it was never intended as a rental property, the only reason we didn't put it on the market at the time of moving was because the market was so flat – agent evaluations were quite low – but that has all changed now, with agent estimates more hopeful.
Only thing is, even putting it on the market immediately may not get it sold in time for us to find, sign up and get moved into our new PPOR before new year.
We can not get any time extension on the end of the lease for the rental property we reside in in our new town.
Outside of putting our own house on the market at a firesale price, we are desperate to avoid additional moves.
B x
See if you can get bridging finance if you are selling the PPOR property. You may find interest rate is higher but it may help with the timing problem.
duckster wrote:See if you can get bridging finance if you are selling the PPOR property. You may find interest rate is higher but it may help with the timing problem.Thanks Duckster!
I would have thought the cost of bridging finance would be higher than that of the likes of the St George relocation loan….I am happy to be corrected though!
B x
Ughhh!
I am guessing by the tumbleweeds blowing along this thread that things are more grim than I imagined!
Trying to find info on bridging loans – plenty mentioned here but having trouble finding mention of the actual institutions used.
St George relocation loan idea turned out to be a bust as although current mortage is under the 80% LVR, the 2nd mortgage would push this beyond that until first house is sold……
Can't believe it….income not a problem at all….looks like we become renters AGAIN!
Arghhhh!
B x
If you live on the Sunshine Coast we have a builder who is happy to sell his new homes on Vendor Finance for as long as you need.
can i ask which builer does this vendor finance, we are a young family on the sunshine coast with the income but no deposit n wanting to rent to buy a home
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