Hello All,
I have heard in the past that some people were able to obtain 105% home loans to cover all of the costs of buying a new home. Can you please tell me how you did this?My situation is as follows. I currently have approximately $100,000 worth of equity in my home I live in, and about $40,000 in my investment property. I would like to purchase a block of flats which would sell for approximately $600,000 but would like to borrow the entire purchase price + expenses. Can anyone tell me if this is possible based on just the basic facts that I have given you and ignoring salary.
Also, when you buy a block of flats, how do the fees work out for pest and building inspections? Are they charged per unit, or is there just a flat fee?
Thanks,
LuckyoneHi Luckyone,
Just gonna give you a quick summary, you have no chance at all due to how much equity you have. 105% works say on…a 100k equity and the property for example you are buying is 60k
a 105% loan would be 63k mortgage loan,
But you can only do this, if you have the security or equity available, though there are other little things involved but this is the main way it works.cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmloh by the way i forgot, most banks want 30% cash deposit for a block of flats/units if there are more than 4 flats/units with in.
Problem is with a loan like that, it will most likely be a Business loan, incuring more fees, quarterly fees, higher interest rates, and larger security, or insurance premiums.
cheers and good luck.
s.i.s
Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmlLuckyone,
agree with Still-in-school,
you’d have to be ‘lucky’ to get that loan, as you say in your post “some people were able to obtain 105% home loans to cover all the costs of buying a new HOME“
With the pest control and building inspections, you’d be charged a flat fee for the lot and here is where you negotiate !! ensure you use quality assured companies or someone you’ve previously used.
I’d be speaking with mortgage brokers if i were you to see where you stand, incorporate the rental income as much as permissable and i’d be thinking your whole salary would be in there also..
To loan money of someone you have to ‘prove’ it’s a good deal for them too !!
Hope all works out for you
All the best
REDWING“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Thanks Guys,
I’ll take all your thoughts on board. I’ll be speaking to my mortgage broker in the morning and see what he thinks.
Wish me luck!Luckyone,
Some lenders will finance 100% of purchase price or valuation of property whichever is lower,
a higher interest rate will apply, 0.3% above SVR.
cheers Steven.[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaLuckyone,
Let us know what your broker recommends.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Liberty Finance used to have a 110% and 105% loan available (on the one security), but it had many conditions and was only for high income earners as it required extra repayments in the first few years. But they have scrapped this loan now (maybe due to a perceived lack of growth in commong years).
There are still 100% loans available, but unlikely for a a block of flats.
How many units in the block? if it is 4 to 6 or less, then you may be able to get away with a ‘normal’ loan, any more and it was probably be classed as commerical.
Also location may be a limiting factor, if in the country, for example, the LVR may be lower.
If you could get 80% LVR, you would need $120,000 deposit plus costs. If you have $140,000 equity available you are nearly there. Also, how did you calculate your equity? Did you leave a buffer, as you could only borrow up to 90% of the value. And are you sure about your values? The 2 properties may be worth more than you thought.
So you are nearly there? Do some more negotiations, ask the vendor to leave some money in the deal for example.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Hi Terryw,
how can he be nearly there, if he only has 140k equity? The block of flats are roughly selling at 600k, i see he has a long way to go. It would be much easier to get 120k in cash rather than get 600k in equity. His equity would have to quadrouple more than 4 times to get near to 600k
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtml
Hi Terryw,how can he be nearly there, if he only has 140k equity? The block of flats are roughly selling at 600k, i see he has a long way to go. It would be much easier to get 120k in cash rather than get 600k in equity. His equity would have to quadrouple more than 4 times to get near to 600k
cheers
s.i.sHi Sis,
What Terry has sugested is correct,
80% LVR =finance of 80% of purchase price, + costs,
Luckyone has $140,000 equity,
$120,000 = 20% of $600,000 and another $20,000 towards the cost.
I hope this helps
Cheers Steven[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaHi Mobile Mortgage,
Thanks for your info, and TerryW, i can now see were you are coming from.
thanks guys
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmlAs you can see folks…
you now know who to call to sort out your mortgages [}
]Good Luck with the venture if you go ahead luckyone
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
You mention the property “would sell for approximately $600,000”, but have not mentioned the valuation.
If the valuation exceeds the purchase price you may be in a position to consider a primary loan plus secondary [mezzanine] loan to finance the shortfall.
This would likely be conducted as a commercial transacation, and of course you would need to demonstrate how the borrowed funds will be serviced. An I/O [Interest Only] repayment scenario could possibly be negotiated to reduce the periodic payments.
There are ways to finance 100% or more, the key is minimizing the lenders risk and providing realistic numbers which clearly demonstrate how the loan will be paid back.
Another option could be seller [or vendor] financing, which would enable you to “control” the property without institutional funds. If the asking price is below market valuation you could potentially “flip” it, pay-off the vendor and walk away with the profit.
— Michael
Hi,
This sounds like a very do-able proposition.
Some advise from another broker for straight buy and hold option (although I like some of the suggestions above too!) – find a lender who would look at this deal, I know a few but they are rare, then pay approx $750 to get their approved valuers to do a valuation before proceeding with anything like refinancing other properties to extract equity for deposit etc.
If your broker is unable to find anyone who’ll do the deal at an acceptable LVR (ie may be 70% max) AND/OR it doesn’t value up, you could waste a lot of time and effort for nought. Serviceability is probably the least of your concerns given the rental return should be good and most lenders will accept 70-80% of the rental income towards serving.
Do not cross-collaterise this property if you can possibly avoid it, because even though this gives you access to 100% of available equity instead of the standard 90% on a refinance, if this 6-pack property goes pear shaped for any reason, you can bet the lender would want to sell the standard property first ie your house.
Good on you for trying, a lot of these types of property are very profitable. Will be keen to hear how you go.
[
]
Mel
[email protected]I have to agree with Michael R, that valuation can play a big part and assist you greatly. I also agree with Mel, try not to cross collatirse. This is great advice and applies to all investments, especially commercial.
There are lenders out there that will lend up to 110% for commercial deals,however I will tell you now, you pay for it. If the deal works with this type of finance it is a definite goer!
There are a couple of other options though;
1st, try asking the vendor for a gift back.
2nd You can use your super to assist. I know of a company where you place your super in a pool fund and recieve a return of 8-10%, if you want to take funds out of the pool, you pay 10-12%. The only problem is, all rent and profits has to go back into your super fund, therefore giving you a even better return.(This is a general overview of how it works, totally legal and approved by all governing bodies).
3rd Joint Venture- join forces with someone else, this how most developers, make the big bucks.
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