Hi,
My wife for and I recently sold an investment property, with an unrestricted cash offer, which should yeild us around $150,000 net profit. Settlement is not until July 1st…but we want to buy a PPOR at end of July for $500,000.
We have the keen purchasers deposit in Settlement Agents Trust Account.
My question is…is it possible to organise finance for a new property, whilst waiting for another to settle, by using Offer and Acceptance contract sort of as collateral?
We would probably need no/low doc, as Im self employed day trader and wife earns $36,000/yr.
We also have a share portfolio worth $200,000 we could maybe use as collateral if possible, and/or my mothers house as collateral with $200,00 equity?Thanks in advance for your time and responses.
Jim
Hi Jim
On the basis you dont need to part with any money until the settlement of your PPOR i cant see an issue in arranging the finance on such a deal.
I have a client in exactly the same boat as you who has been trading derivatives for 20 years and whilst many lenders didnt like that as an occupation his net worth is substantial and we managed to get the deal over the line.
A copy of the unconditional sale contract will help the situation.
Just on a separate not is there a reason why the Settlement date is July 1.
Hopefully it is not for Capital gains purposes as if so CGT is based on the Contract date and not Settlement date.Richard Taylor | Australia's leading private lender
Would also agree with Richard that Finance can easily be arranged and maybe be also 'subject to sale of property x' both for the equity contribution of ~$150k (if needed) and also to reduce commitments.
If you could provide copies of last 2-3 years tax returns from your trading activities to verify your income most lender sshould be able to use this and your wifes income to establish servicability.
Some Lenders may have trouble using your share portfolio as collateral due to the nature the documentation required and due to the fluctuating value of such collateral. For some lender its just to hard (although not really)
I would also suggest that most lenders would not at all be interested in using your mothers house as collateral as they would be very hesitant in regards to 3rd party nature of the security, there have been some court cases where such security has been deemed as not enforcable and the courts have 'put aside' this type of security
A Lodoc / Nodoc loan would only be required if you are unable to substantiate your income thru you last 2 Years Tax returns.
Due to your occupation it is not as easy as it sounds but as mentioned we have financed another client in exactly the same way recently. Only issue i could see was if you are not registered for GST (and probably not required to be being a day trader) you cannot declare a Turnover of more than $75,000 Per Annum.
Richard Taylor | Australia's leading private lender
The idea of yours is really great. I really appreciate and thank for sharing such a knowledgable experience of his over here in this thread. I think that olds007 has totally clear what exactly the issue was. Now only thing remain is consult loan advisor and ask him what exactly he/she can do for you. There are many good institutions that are ready to help.
Suncorp do one of the better Low-doc loans, more personal detail is required but from first look it may meet your needs.
Unfortunately Suncorp do not do lodoc for day traders as it is deemed too high risk.
Richard Taylor | Australia's leading private lender
Jim, you may also want to consider requesting the release of the deposit paid by your purcahsers so that you can use it for your next purchase if need be. Another option is a deposit bond.
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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