Forum Replies Created
Sash – it is consistant with your previous income?
Eloi, There might be a couple of points in there:- and I personally think the under supply is a bit overstated. However; there has always been bull markets, there has always been bear markets, always been booms and recessions. Some people make money in shares and property; long bull markets generate false confidence and a flood of mum and dad investors run to investment and then everyone gets burnt. This regular crash and rebuild is just normal life… Normal cycles… There are also always people that think the next one is the big kahuna e.g. The end of the world / the shy falling on our heads… The US will colapse, property will be worth nothing. To assume this is the big kahuna might be right – but like all the skeptics in every other recession they are most likley wrong (albeit they will claim to be right if we have a 10 year depression). Like Nostradamus, the revelations chapter of the bible, year 2000 and all the other end of world theories – they are all correct to assume everything comes to an end – I don't think anyone thinks we will all live forever… Out world economy is no different. Personally I don't think the big kahuna will be in our life times – the US is down financially but that's just part of life, we might have a drop in property prices. If your debt level if low and income stable you are fine. It is the people that are geared high (over 80%) at risk – hence banks take out insurance when they lend to them… If you are going to worry about the next recession. You may as well also start making preparation for the sun going out…
I’ll just give you feedback on what to expect from the majors –
There were times banks paid a little more notice to end value however it is an area where a HUGE percentage of loans fall in to default / arrears. If you have problems during contruction e.g. Financial problems, problems with an exteral business, seperation etc. – the end value means nothing.
So banks generally look at total costs and end value (never end Val alone).
For example.
Total costs include: land purchase (or valuation if owned), construction cost, government fees, interest, architects and in some cases project management fees. Any other real costs can be included.
In some cases the banks will lend say; 80% of total costs; but not more that 60% of end value. They can go higher but doubtful without experience developing and plenty of assets.
Couple of points;
1. It’s also worth noting a fixed price contract for 6 units will be treated as a load of bollocks. No builder would commit to something this size without room to move. The bank would still allow a buffer… Will not rely on fixed price as actual cost …
2. Coatings are generally confirmed by a quantity surveyor picked on the banks panel – to ensure costs are accurate
3. Your money goes in before the banks – this way the bank knows there is money to complete (so you don’t spend some of your funds and fall short)
4. If you can’t service the entire debt; you will need some off the plan sales (pre-sales) before bank funding kicks in
5. Whether or not you’ve a background in development will be important to most banks – it’s not a market for first timers:- even very wealthy experienced developer are finding it tough – bankwest, suncorp and many others weren’t even accepting applications for a lengthy period.In short – these are hard deals to place at the moment. The banks are still keen on development but is has to be a strong deal.
There are options outside of the banks; or combination of bank and investor funding. But given the numbers you mentioned – the return will start getting skinny compared to the risks if you involve other people.
I’ll let someone else cover other options…
Banker
What lender is it?
If it’s a mortgage manager with deferred etc fees I wouldn’t got near it.
Depending on the loan amount I could give you someone in each state at CBA or ANZ that can do the same. Dealing direct with the bank.
Banker
What lender is it?
If it’s a mortgage manager with deferred etc fees I wouldn’t got near it.
Depending on the loan amount I could give you someone in each state at CBA or ANZ that can do the same. Dealing direct with the bank.
Banker
Terry – I have the option of broker channel or referring direct (paid less via direct). I’ve now pretty much given the broker channels the flick.
The guys I use direct get things approved – in some cases approve them when I’m on the phone. It’s simply a different set of rules via broker channels at the moment – different credit teams and far tighter on policy.I would say yhe best option is to research, find the lender that will assist and most importantly find a good contact within that bank / chances of getting what you want are far greater.
CBA. As long as it is not a serviced apartment or student accomidation.
Min size 18sq… Have the policy in front of me…
crusty wrote:Paul which bank will lend you 80% on farm land , I have never heard of any bank lending more than 65 % on farm land and trhat is if you have lots of other assets and a good income, except perhaps RFC but being a holiday home I guess that wont fit their criteria. Wont you also have to pay commercial rates of interest of 9-10%. You will also have maintaince, issues with weeds and vermin and need plant and equipment such as sprayers, tractor, mower, ploughs.CBA treats non income producing rural residential as standard residential up to 50 hectares or 125 acres. I recently did a 25 acre at 90 % LMI capped to 92%.
If the deal is under 1M – no LMI approval (LMI approval is automatic).
If the zone is rural and it has a house – it is treated as rural residential.
Banker
It’s not that unusual. In my bank days I’ve collected security packets (where titles/ contract etc are held) when increasing a loan or releasing a title – and long behold there is the original transfer and mortgage – woops… Never lodged. Do a title search and the property is still in the vendors name from years earlier…
I wouldn’t read to much in to it. Like all industries mistakes happen. The title is safe in the banks security area, they have the originL transfer and mortgage – we just looked like dumb asses registering it with th title office years later…
Excuse my spelling – I’m typing on my phone…
Major 4 and most others- as far as I am aware…
We don’t know if the land is income producing or not…
Vic is not too big. Depending on the use of the land, where they bank and if they have have other property you could get 80%.
For example. If they were in the top risk grade, had other property or assets, good income etc banks will bend if land size is the only exception to policy. If the deal was not strong in all areas it would be reduced to say 60% – as Terry said above.
Income producing would mean it’s an agri business deal. Not retail.
I’d also like to point out it is filmed like a low budget horror film. Complete with scary music, spooky camera angles and a bit of a conspiracy theory. Wish they had made it a little more factual and informative – cartoon injections and floating dollar signs made me feel like I was watching another Westpac educational movie about bananas…
There is a message in there but take it with a grain of salt. This dock belongs on the library shelf in the children section along with Robert kiyosaki books…
Just for the record i’ve only seen 2 valualtions under purchse price in the last 12 months. I know that people dealing with off the plan apartments come across low vals all the time but for houses it’s pretty rare.
Often you don’t even need to value a clients existing properties (subject to lender) so I’d have to say where I’m sitting the valuation problem with the banks is a little exagerated:- unless of course you are financing off the plan properties in which case; I’d say the properties are more likley overpriced than values being low…
Before you pull me up on the no Val issue. It’s worth noting major banks look after high rated clients. Westpac is getting a bit tighter however CBA still accepts owner estimate for valuation if rating 1 or 2 existing client. That means; if you have long term stable employment, minimal external debt, and have been with the bank for a long time – your estimated value of existing properties is often sufficient as the valuation.
Problem with most brokers is that knowing who has a cheap rate is easy – it’s on the net.
Understanding valuation policies, underwriters discretion for exceptions to policy, how credit scores are assessed, and having the right contacts to pull a few favors is all foreign to the average broker.Paul – what LVR arr you looking 4.
Is it a farm? Or non farming land?
Maybe the buyer didn’t want the property – got his mamager to knock the deal on the head?
Dennis,
I’ve spent most my life in banks. Now out but still advise a little.
Of course you can get a better rate. Especially in business banking where as a banker you include brokerage in the aquasition cost of a deal – and set you margins accordingly. Brokers offer superior choice. Bankers offer supieror price and flexability (with one lender). Its always been the same.
Re cash back brokers – you won’t find an expeienced broker that offers this to the average client. A few years ago I had to train a group of brokers from a new franchise group ( I’m sure you can guess which one). One turned up to my training session with wearing a dog collar, his wife in a gothic costume:-)
With the average broker in Australia settling approx 700k per month and netting approx 0.5% upfront (3500 p/m). You would have to be a little worried about the ones that pay you to be their customer..
Is his accountant Wayne Swan?
hschmid wrote:I have heard that they have instructed some of their main valuers to discount their thinking by 10% as a subtle way of killing a deal.Complete load of bollocks.
Reality is that many people have paid over market value for properties in the last year or so.
Going back almost 2 years I had a client who purchased a property and needed to sell his existing home. The bank valued at 700k and it took more that 6 months to sell, finally selling for 550k. When I met the client they said they would have never overcomitted if the bank didn’t inflate the value. They then lodged a complaint to the banking ombusman…
Valuers sometimes get the figures wrong. But almost every time in a slow market (like now) an owners estimate is out.
Going back to the original post – did you get a copy of the valuation?
You might be right however a lot of properties in metro melbourne have dipped 5 to 10 %. if they dropped or previously sold over market value is debatable.
They are NOT a lender. They are a Mortgage Manager…
Who is the lender?
Same as 1000 other mortgage managers:- wholesale funders!They might be nice guys but I wouldn’t go there…
Like all the other mortgage managers – clients that have been burnt are too many to be counted…
No we’re not.
Our system is inflated with easy access to money, stimulas, negative savings patterns and reliance on never ending growth (capitalism). Without never ending growth out economy dies. Never ending growth is impossible.
I’m not being negative, I just know that if I’m eating an icecream, it doesn’t matter how small my licks are – at some point it will be gone.
No one knows if our big crash will be next year, in 5 years, in 20 years or even 100 years.
Bit like wondering if you will ever die…
Hopefully not too soon…
