Forum Replies Created
Hi Richard,
I'd love it if you could pop me on that list for your upcoming e-book as well if you don't mind!
Cheers,
Matt.
Hi Alf,
Have you had any experience with the Tea Tree Gully council? Potentially looking at a simple subdivision and re-sell to start with.
Thanks,
Matt.
Hi Andrew,
Thanks for your reply. That would be my ideal scenario however I’m finding it hard to find properties that would fit this criteria. Especially in suburbs where land would fetch a premium.
I’d like to hear an example and see the numbers of your recent project.
Cheers,
Matt.
Hi K,
I'd love to do it myself, but this will be my first project so I thought I might be better off getting someone else's help before attempting to do it on my own.
Would you mind sharing some of your experiences? I'd love to hear about how you go about the process of selecting a property and some examples of the type of projects / profits you have made.
To start with I am looking at a simple subdivision project. Buy an old house on a big block, demolish it, subdivide and then sell the two blocks of land. Once I have some more capital behind me I will start developing the land, but for now I have to stick with subdividing and selling the land only.
Have you had any experiences with this kind of project? I would really appreciate any insight you could share, especially given you are in Adelaide as well.
Cheers,
Matt.
Hi Pwinne,
Most Banks will lend you the 90% (plus Mortgage Insurance) on both the land and the building. Basically this means you will need to come up with a 10% deposit for each (plus cover the Govt fees on the purchase of the land).
Construction valuations generally come about by adding the land contract to the building contract and the Banks will then lend you the 90% of the total of the two.
Example:
Land Contract – $150k
Build Contract – $200k
Total Contracts – $350kTherefore the Bank will lend you your 90% of the total of the contracts = $315k.
Hope this makes sense!
Kind Regards,
Matt.
Hi Cath,
I believe they would use the most recent valuation as Richard has said. At the CBA we generally use any valuation that has been completed in the past 6 months unless there is a particular reason to order a fresh one (renovations completed etc).
Cheers,
Matt.
No worries Richard. CBA does also have a 'Low Deposit Premium' that we charge place of LMI, but only for very strong applications. This too can reduce the amount payable, but obviously is assessed on a case by case basis and is not guaranteed for everyone.
Regards,
Matt.
Hi Richard,
This generalisation is the case with most big banks.
Would love to hear about your options to reduce it.
Regards,
Matt.
No worries at all Cathy – more than happy to help out any time! I'm also happy to run some figures through a calculator to see if your application would service to give you more confidence to apply for the new loan for you if you want. Just let me know.
Good luck with it all!
Kind Regards,
Matt.
Hi Cathy,
You are spot on – most Banks do not like taking second mortgages and you are much more likely to get your Line of Credit approved with your existing lender! When purchasing your new property though you can choose whoever you like because they will only be taking the new investment property as security!
I hope it all works out for you Cathy!
Kind Regards,
Matt.
Great point Sonya – please make sure you don't have any redraw fees on your loan!
No problems Cathy – more than happy to help out! Feel free to PM or email me if I can be of any further assistance!
Good luck!
Kind Regards,
Matt.
Hi Cathy,
A lot of investors do structure their loans similar to what you are proposing. A good thing with doing it that way is that do you do not have to cross-securitise your properties!
I won't comment about the choice of Bank's as I may be a little biased in that respect… Haha!
Feel free to PM me if you have any specific queries – more than happy to help out where I can!
Kind Regards,
Matt.
Hi Cathy,
No problems at all happy to help!
You are half right in your calculations but you need to work out your LVR (Loan to Value Ratio):
– Total Debt ($560k) / Total Value of Properties ($650k) = 86% LVR
So you do have $90k (or 14% equity), however all Banks will only lend you up to 80% of the value of the properties without mortgage insurance) and some up to 95% with mortgage insurance.
If your lender will allow you to go up to 95% the maximum extra amount you would be able to borrow (based on the property values above) would be $57,500 ($650k x 95% = $617,500 – $560k (existing debt) = $57,500).
The above is based on the fact that the properties are valued at $380k and $270k (yes, Bank panel valuers are generally slightly on the conservative side), and that your lender will allow you to go up to 95% LVR. Please also keep in mind that as you are over the standard 80% LVR, your loan would be subject to Mortgage Insurance which could add several thousand dollars to your loan.
I hope this makes sense.
Kind Regards,
Matt.
Hi Harry,
No matter whether you have the offset or deposit your funds (and then redraw) into the Loan directly, the balance of your loan will still decrease at the same rate (assuming you are making principal and interest repayments).
If you are happy to have your pay deposited directly into the loan and then manually transfer money out every time you need it then you can do it that way and save yourself $96 a year and pay pretty much the same amount of interest as you would with your offset account.
I guess you just have to weigh up whether that minor inconvenience is worth it to save $96 a year?
Hope this helps! Good luck.
Kind Regards,
Matt.
Hi Cathy,
The Bank wouldn't (or should I say SHOULDN'T) decline your loan just because it is too close to the original refinance. As long as you have the equity available in your current properties, you have enough income to service the increased debt, and your repayment history / credit worthiness is good – there is no reason why the Bank shouldn't approve the loan. Of course there can be some other factors involved but they are the main things a Bank looks at in the Home Loan Application.
Hope this helps Cathy. Good luck!
Kind Regards,
Matt.
Hi Ediot,
A $2,000 credit card would not have a huge bearing on your Home Loan application as it only equates to about $50 in monthly repayments. The key thing to remember is that the Bank will assess this debt on the LIMIT of the card not the balance. Having said that, it always looks better to the Bank if your balance is normally well below the limit.
On the other hand, if servicing (available income to service debts) is tight – that small credit card could make all the difference! It does depend on each individual case, but normally a small credit card like that would not make much of an impact to the application.
Hope this helps. Good luck.
Kind Regards,
Matt.
Hi There,
You could still have a good chance of approval if all other areas of your application are strong (credit worthiness, income, etc etc). The Bank would also look at your previous employment history (to ensure you weren't going from job to job every few months). But assuming everything else comes up ok you could still get an approval during probation. You can get a pre-approval letter in place whist you are at your new job and prove your income then, as long as you will be purchasing soon after, as most pre-approvals are only good for 6 months these days.
Not sure on the policies on all other banks, but you might struggle to get a 95% plus LMI lend unless you have a good existing relationship with that Bank. Most would probably only lend 90% plus LMI for an IP…
Hope this helps! Good luck!
Regards,
Matt.
Thanks all for the comments I really appreciate it.
Subzero, can I ask how you usually approach these Real Estate agents and how you offer to help them?
Thanks Duckster – I really appreciate the advice. I will certainly look to implement most – if not all of those ideas. In fact with some I already have begun! Have you or anyone you know had much success advertising in the local paper or with a leaflet / flyer drop in the local area?
These are also ideas I am wanting to try but was not sure what the success rate for this type of advertising would be.
Thanks again for your input.
Cheers,
Matt.
