I am putting in an offer, the owner is very eager to sell to me!
It is a fix up job, where I will buy the house, give it a coat of paint, and fix the carpet and floorboards, and bring up the value immediately. It is in Doncaster. It is around $300,000.
1)I would like to know, which bank allows me to do this strategy- where i can buy now, fix up and increase value, and then either refinance within a few months, OR take out a Line Of Credit or overdraft from the new improved value.
2)Which bank allows me to -Put in $20,000 in their fixed deposit, then ask them to loan me 100% or close to that, with the $20,000 as colateral/security in their bank. Then later, I will get it revalued (after improvement), and with the new value, ask them to release the fix term deposit colateral.
3) Is there a bank now which allows to lend on the real value of the property (not purchase price), if I bought it at discount?
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Hi Fullout,
A lot of lenders will let you take out a loan with them and then do a “top up” loan after a few months, but they must be willing to actually get a new valuation if you think that the value has increased. I would be very conservative in your estimations of the value if it’s only been a few months, just in case you don’t get the val you wanted.
Point two, this is just not the way it works with banks…. they either lend you 100% irrespective of whether you have funds in an account with them or not.. St George will to a high lend, but if you have $20K already you may want to stick to a more conventional product to save on your interest rate.
Don’t know of any banks that will lend on the real value if the purchase price is lower, especially at a higher LVR as the Mortgage Insurers are even tougher then the banks.
If you really think this property is worth it you the only course of action I can see for you is to put your $20K down as deposit, fund the rest, do the renos, in 3 months request the bank does a re-valuation (fees involved) and see if you get the val you want to get to the equity. Failing a decent valuation your exit strategy may be to sell. Further, if you are Mortgage Insured and sell within the year you may be entitled to a portion of the LMI refund….
[2way]Liz
Mortgage Lender
Can get a reval pretty quickly with some lenders. In under three months generally but I am reliably informed that Tonto will do it much faster – immediadetly I believe.
Consider doing the reno on personal loan or even a credit card with a low 6 month intro rate?
Just some ideas.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
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.
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