Forum Replies Created
Sounds like a big mess…
I would be talking to another accountant/solicitor or 3 to ensure that the course of action you about to undertake is definitely the best one for you, to avoid any costly repeats.
Should you need a loan, you may qualify for a Lo Doc equity loan of some description. There’s a plethora of them nowadays, from virtually all mainstream lenders: your suitablity would depend on a few things..
If you are retired, you might want to see if you qualify for a reverse mortage (a loan where the repayments are added to the mortgage and the loan repaid in full from the property when you die – St George has a reasonable one – but you will be gradually eroding the equity in your property as the years go by).Talk to a Mortgage broker to see you options loan-wise AFTER getting some more advice re best way for you to proceed. If you’re in Sydney you can call me direct on 041 2061218 or 02 95991144. Lots of other good brokers on this forum – best to use someone you can talk to face to face.
Good luck.
theloanarranger
With commercial loans/property, rule of thumb is most lenders will restrict you to a 70% LVR. (for documented loans. For Lo Doc Commercial loans be very careful – they get ugly pretty quick..)Tenant usually pays all the outgoings, rates, water, etc, in addition to the rent.
Another rule of thumb – price should be reflective of 10% rental return – and that actual return, NOT potential return..
Good luck.
theloanarranger
Elsa, If you have only just settled selling the unit might be a costly idea – capital gains tax might apply, agents costs to sell, etc. There’s not enough information in your original post to give specific info or ideas to what you can do – the correct course of action depends on a number of things.
If I assume rightly, you need to give back the money to your relative. You need to see if you can afford to have the whole debt yourself, and/or there is enough equity in the property to refinance and obtain enough cash to pay back your relative. If you bought the unit off the plan (before it was built) there might be some equity there. But you need to talk to someone in detail about your situation.
I’m a Mortgage broker not far from Petersham (Brighton Le Sands – 15 minute drive), you can call me direct on 041 2061218, there are lots of other Mortgage brokers on this forum, or you might what to use a Mortgage broker that speaks your language. In any case, you should talk to a broker about what your options are.
Good luck.
theloanarranger
2 Questions to ask youself – 1) is there a DEFINITE option to redevelop/rezone and is it realistically going to make you lotsa $$$ at some stage with all costings, etc taken into account, and 2) How will you feel if you lose the property (and the $$$$ potential) for a lousy $10k.
If the answer to Q1 is very positive, haggle like crazy but don’t miss it for a (relatively) few bucks – opportunties re adjoining props and resultant development options don’t come along every day..
Happy haggling.
theloanarranger
Why not buy it in conjunction with them? When they’re ready they can buy out your share for an agreed ( a greed?) price, depending on how much of a buck you want to make off your Mum…
theloanarranger
Waz11, small deposits mean you can spread your cash over more properties, etc. However, do your sums on the 100% lends – establishment costs, (generally) higher rates, restrictions as to location, etc on these types of loans can well and truely offset the advantages of putting in little of your own $$$$. Good luck.
theloanarranger
Re Goals: Picture your favorite AFL/ soccer/basketball/waterpolo/etc team playing.
Now take away the goals – wattaya got? A bunch of people playing around, making passes at one another. And when the match is over, all they’ve got to show for their efforts, (ok, apart from increased fitness and maybe some new friends..) is they’re pretty tired and a little bit older.Big or small, modest or ambitious, have some goals – if you don’t know what you want, how will you know when you’ve got it?
theloanarranger
The short answer – no. Don’t own it – can’t claim it..
theloanarranger
This has happened to a few of my clients – in essence, a computer glitch/funds transfer stuffup/something similar occurs, and your repayment isn’t deducted on the due date – hey presto! you’re in arrears. Their computer does not retry until the due date next month, and then only takes the scheduled payment, you’re still behind, and their system notes you’re a payment behind AGAIN this month. And so on.
Another possibility is that although you are $1800 ahead in payments, their computer cannot/will not utilize that money for a repayment because it only has instructions to take the money out of your nominated account. If it’s not there on the due date – you’re in arrears..
Depending on your arrangements and loan type, could be either – if you are sure the fault is not yours, ie your repayments were on time, call your broker or visit your lender and raise hell ’til the reason is identified and it’s fixed
ie late payment history has been wiped. Do this before considering refinancing if everything else (loan type/rate/service/etc) is ok – a lot of lenders will shy away from those with late payment history on their statements.PS If I’m going on a bit, it’s ’cause I’ve had it with lenders’ penalizing their (and my) customers’ for the the lenders mistakes!
theloanarranger
Mortgager Insurers – the bane of my working life, hate-em-with-a-passion, etc,etc – are carrying the risk. The lender would be happy to lend whatever % wherever, as the MI will carry the can and the $$$$ if/when the borrower defaults or takes off, etc. The MI may have decided the area may be on the decline, the security property might not justify a 95% lend, or as is commonly the case, no reason at all..
If this has happened to you, you could try asking the lender to resubmit to their other MI for reconsideration, (if they use more than 1 MI). Ask the lender who they use, and what is the justification for lowering the LVR.
theloanarranger
Up front – I am closely associated with a Private Sale co (FSBO Aust) and strong avocate that most people (not all, but the vast majority) should consider sell their o/o property themselves. The savings (tax free on the family home) are very substantial – an average last fin year of $15k within Sydney metro. And, I might add, with LESS time (yep)and a lot less drama, than selling the same property through a agent.
However, invest property is not so straightforward, due to tenants, location, tax implications, etc. Due to individual circumstances and temperment, etc, I’ve probably recommended to about 50% of people approaching me considering selling IP’s that they should use an agent – not something I like doing..
Different horses for different courses. Selling privately is a definite option for property owners, but not the correct choice for everyone, everytime.
theloanarranger
Ok, if you put down 20% (+ costs)and it’s +CF would suggest 3 or 5 years I.O. no frills or honeymoon loan. Your choice of lenders will be limited to those happy to lend to you here on a property in NZ.
To redraw equity I assume you believe the value of the property will increase fairly quickly..?
Should you want to draw money out you would have to have the prop revalued and the loan drawn back up to 80% of the new valuation figure. If you go over 80% of whatever val figure the lender is using then you’ll be up for mortgage insurance premium. If you don’t believe prop will increase in val shortly might I suggest paying 10% deposit (and the associated M.I. premium) which leaves the other 10% to use on another property.‘xcuse if this sounds pretty basic but I don’t know what you know and have made assumptions on situation based on your last post. Happy to help with suggestions – can email me direct on [email protected] with specific info, call me on 0412061218 or else check out these forum pages by doing a search – there’s a heck of a lot of info here, just for the reading..
Cheers
theloanarranger
Hey John,
It would help to know if you have an owner occ property – is that the equity you will be tapping into? If so, simplest would be to get a line of credit on that up to 80% of valuation, and use the excess over any existing debt for a deposit (20% if possible to avoid Mort Insurance costs) and get a cheap as chips I.O. loan for the balance. Might I suggest you talk to a Mortgage Broker – that’s what we do! I’m in Sydney, but there are plenty of Brokers in these forums – probably a good idea to use one close to you, but not strictly necessary.
If you haven’t got an existing property with existing equity then just put down the smallest deposit the sums justify, perhaps using a loan that has a 100% offset attached, as somewhere to park your excess funds until you go again.
As I mentioned, think about using a Broker – the service is free, and most should be able to tailor a loan structure to suit your circumstances. Happy hunting.
theloanarranger
Just a thought..
I’m a strong avocate of selling privately, although with IP’s it’s far from straightforward. BUT when you decide to sell, take the time to write to your tenant, and give them first option. (After all, they must like the place – they chose to live there). Not a great chance of success, but phrased correctly the letter will keep your tenants onside during the sale process.
Re RE Agency – no-one seems to have mentioned Sole agency (an Open listing with just 1 agent, but you retain the right to sell yourself without paying comm. They sell it, they get paid.
Am strongly in favour of limiting agency to a few weeks – if the service is good you can happily sign another agreement each time it expires. Guaranteed to keep the Agent reporting back to you and on his toes..theloanarranger
Different strokes for different folks. +CF vs neg geared will always raise an argument. I’ve got both, each aquired for different reasons.
+CF props DO allow you a lot more scope though, i.e. instant income, additional borrowing capacity, etc.
theloanarranger
Inspirational post. I still smoke, despite years of thinking/considering, but never really DECIDING to give up. Got a whole bundle of excuses as to why I can’t give up just yet (I know, I know – even I don’t believe half of ’em..)
Giving up for the $$ savings alone doesn’t work for me – I’d still buy at twice the price, despite realizing how much extra I’d have to spend on my other filthy habits.. [cigar]
But how that decision led to the other decision/s, etc, etc – good to hear. I’m told, and have no doubt myself, that giving up the gaspers is the hardest thing you’ll ever do. Sincere congrats on the effort. I hope to join the club myself sometime soon. Cheers.
Congrats on giving up
theloanarranger
Hi Ret,
Far be from me to push my own cart, but I am in Sydney and been broking for many years. Know property, as was formerly an R/E agent (prior to deciding ethics more important..) and now a senior consultant to a R/E Private Sale company. Am more than happy to discuss any and all scenarios. Find me at [email protected] or on 041 2061218, 02 9599 1144
theloanarranger
Can be useful as a snapshot of the market 2 – 3 months ago.. Their growth forecasts can be useful to clarify your own crystal ball.
theloanarranger
Hey Scullie,
A coupla quick thoughts – if you are keeping the old house as an investment with debt level of $140k, it would go close to being +CF on those rents you mention. Suggest you change your repayments to Interest Only on this loan asap – there is no point reducing this debt if you are going to keep it, and about to have a large debt
on an owner occupied property (no tax concessions there..). see if your bank will allow you to pay extra/100% offset to start reducing the new loan asap – reducing the new loan should be your priority if it is to become your residence..Cheers,
theloanarranger
Maybe it didn’t trust the road in their JV?[confused2]
theloanarranger
