Forum Replies Created
Hi Richard,
Wilko mentioned above of a product that can provide 100% financing with a secured and unsecured component. Do you still have such product and if yes, could you please let me know the criteria. Thanks.
Jenny
Another fact that I thought 95%LVR wouldn't work was because even though I was planning to live in it at first, but I may soon later rent out part of the property (the property has a bungalow at the back with full utilities, but not separately metered. Once I have put in separate meter boxes, there is a high chance that I will rent out part of it. Which part I will rent out will depend on whether separate meter boxes can be serviced for the bungalow – if can be done, then I will stay in the bungalow and rent out the front home; but if can't be done, then I will stay in the front house and rent out the back bungalow (and adjust the rent to cover all utility costs).
I am aware that lenders don't generally lend 95% for investment purpose – hence the reason for 90% LVR.
Regards,
Jenny
Thanks, Richard & Wilko,
I don't know the vendor or the agent. The contract would definitely be conducted in a business manner; i.e.: not an under-the-table contract. The property is in a semi-regional area and has been on the market for some time. The agent said the vendors are willing for a long settlement because they currently have a good long tenant in the property.
I was tossing between saving for 3 or 4 months for the 5%, then go for the 95% loan as the first option and the second option, which was the monthly progressive payment till settlement date. But my understanding is that it is much more difficult to obtain 95%LVR than 90%, given my situation – no asset and no savings relative to earnings and age. Hence, the reason why I was thinking for the progressive-payments to firstly, reach 10% by settlement and so only need to obtain finance for 90% LVR, and secondly to get 'that property' now rather than having to wait for 3 to 4 months to save for the 5% deposit, by which time the property might have gone.
But hearing all the advices you kindly gave so far, I will have to consider.
But just one more question, please – regarding the upfront costs, I have read in other forums of this website which seem to indicate that there was a VISA facility attached to the home loan that some lenders gave to fund for the upfront Gov't costs – is this still the case? Does this facility required security? From my reading, I thought the facility was like an unsecured personal loan. Isn't there any way I can get funding for these costs, unsecured?
Thanks,
Regards,
Jenny
Hi Richard,
Re. your comment: "You wont get any lender give you a formal approval without evidence the deposit has been paid in full so i would suggest that you be careful going unconditional without having finance all approved". In my previous example, the proposed settlement was 5 months. But if I were to extend the settlement out by another month to 6 months, so that at the end of the 5th month (by which time the 10% payment would have been paid in full), I applied for a home loan. Do you think any lender would give approval, base on the fact that they now could see the 10% deposit have been paid (evidenced via the receipts from the vendor's agent/solicitor)?
Also, would 1 month be sufficient for starting the loan application process to settlement in full? Bear in mind that the vendor and I would have our solicitors in contract well before the loan application process.
Regards,
Jenny
Thanks, Richard & Tom.
I was planning for 10% deposit so to negate the 5% genuine saving requirements. But you mentioned, Richard, that "There might be a couple of ways around this if you can save at least 5% deposit over a minimum of 3 months depending on which State….' Could you please elaborate on what other ways around if I could save at least 5% over 3 months.
The property is in Victoria.
Regards,
Jenny
Thanks, Tom – your explanation has cleared the clouds.
Thanks, All.
Pretty informative stuff. One thing I still don't understand – What is the LOC for when the Visa card seems suffice (other than for the purpose of keeping the Visa opened, as per Grant's explanation)? I mean if the main home loan amount was not sufficient, why not include the LOC with the main home loan in order to get the cheaper rate (0.10% less). On the other hand, if the home loan amount was sufficient, then why need the LOC at all? If the LOC is not used, there won't be any interested charged, right?,
I noted that the VISA maximum is $20K. Does this mean that if the borrower already has a personal loan, or car loan or overdraft for $20K, the chance of the VISA being approved is non-existent?
Regards,
Jenny
Thanks, Grant. I don't remember whether it was Homeloans or another broking house, but I was told that the 5% MUST come from genuine savings (i.e.: no exemption). Does Homeloans require 5% in genuine saving?
Hi Shahin, what did you mean by 'OP' when you said: "The danger with this deal is that a) you are paying a premium on the interest and b) both Homeloans and Adelaide bank bagded products have very restrictive policies so its crucial that the OP takes all this into consideration when choosing a lender".
Regards,
Jenny111
another bank I was told was Bendigo and that the $20K visa usage would not be accessible until about 2 weeks 'after' settlement, which was no use to me, as I would have to borrow elsewhere for the amount for this period in order to pay for the stamp duty costs 'at' settlement.
Hi.
Could someone please let me know which lenders offer a visa with 20K limit to cover for purchase costs, yet the limit is not included in the LVR calculation? And what the criteria would be? Is genuine savings is required and spread over what period? Thanks.
Regards,
Jenny111
Thanks, Terry.
Who regulates the Vendor Finance market? I meant in the case of one vendor quoted the interest rate close to 7%, but I calculated it to be almost 10% (9.90% to be exact). This is on top of the quoted price of the property which was probably around 15% to 18% above its true value. Is there any regulatory body to ensure integrity in the industry?
What I meant was if I were to buy a property through the Vendor Finance channel and if I later had a dispute, who could I turn to? With my bank, if they incorrectly calculated the interest or fees they charged me, I know I could go to the Banking Ombudsman as a last resort. But who do I go to with vendor finance deals? Thanks.
Regards,
Jenny
Thanks a lot for the info, Paul.
Regards,
Jenny
Hi Richard, I am looking to 'buy', not sell.
Hi Everyone,
what is the going vendor-finance interest rate for P&I? Does the purchaser pay the stamp duty, transfer of land etc…during the rent-to-own period? How long is the rent period usually? Can the purchaser onsell the property during the rent-to-own period? is the property price negotiable? Can the vendor alter the repayment term at any time during the rent-to-own period? Will the vendor produce a statement of P&I reduction prior to the agreement to indicate how much the loan is reduced over so many years?
I generally see the advertising price for vendor finance home for sale at 10% (or more) higher than its true value. On top of the higher initial price, the ongoing interest rate is sky rocketing. One vendor quoted around 7%, but when I sat down and did the figure, it turned out to be almost 10%. Hence, my first question above.
Thanks.
Jenny
Kevin, and you don't have any lengthy vacancy when you advertised for tenants? I see alot of homes there are for 'first home buyers', are these properties new (or nearly new), do you know? These properties seem to be ok; they don't look too old.
And did you manage to get 80% LVR on these properties? I am hearing that small town like this, banks require at least 70% of the house value, rather than the standard 80%.
Thanks.
Jenny
Hi Kevin,
which rural towns in SA do you have properties in and are they rented ok – I mean you don't have any long vacancy problem?
I remember reading in the Australian property magazine, which said that SA in general currently has a huge oversupply of housing stocks. In fact so huge that all housing construction could stop for 5 consecutive years and it would still not affect the demand. Do you agree?
To test that message, I jumped onto realestate.com.au and pulled down a number of houses for sale from over a dozen suburbs across SA. What I noted was a high percentage of the houses had photos that clearly show the homes are vacant..
Hope to receive comments from others as well.
Jenny
Hi Jamie (and Richard)
I have no doubt of Richard's experience and would love to make the contact when the right time comes (probably in 12 to 18 months time when hopefully I have accumulated a decent deposit savings…) Honestly, at the moment, my savings is almost non-existent. Would prefer a standard loan and no mortgage insurance though.
Anyway, you are not a bad Broker yourself, Jamie, from what I am reading in this Forum!
Cheers,
Jenny
That makes sense now. Thanks Shahin & Richard.
Thanks, Everyone.
The BAS statements don't really reveal whether the borrower is a trustee or a guarantor. Do lenders take into account of the borrower who happens to also be a guarantor or a borrowing trustee of another entity (let say a company or family trust) when they assess Lo Doc? Would the answer be the same as for standard loan?
I mean generally people only borrow when they believe or are confident that they will be able to pay it back (comfortably). So the question is – why would anyone still opts for Lo Doc when it firstly would require a higher down payment (40%) as opposed to the standard 20% before mortgage insurance kicks in, and secondly Lo Doc also has a higher interest rate, fees and charges? Nowaday, 20% deposit is a considerable amount of money which would require time to accumulate.
I mean why wait longer to obtain the 40% deposit when one can start the first step toward owning a property with only half of that deposit (not to mention the higher interest charges and fees incur with Lo Doc). Hence, I am thinking not having to reveal about being a trustee/guarantor may be the reason why people still go for Lo Docs.
On the surface, I see more disadvantages than benefits in Lo Doc. But perhaps I am wrong.
