Following scenario…
In the process of settling an IP (OTP)
Purchase Price: $281,500
Current comp sales $330,000
Contract Date: 19/12/2003I now there are a few lenders who lend on valuation up to 90% LVR, but to a maximum of the contract price. This would still leave me with a small stamp duty & legal costs to pay out.
Confident of valuation being $330k, which would mean that the loan amount theoretically is $297k, would any of these lenders, capitalise the stamp duty ($2536) & legals etc… Is this a straight policy decision on their part or do they have some flexibility…
Otherwise, would probably go down the path of 95%LVR on contract price plus LMI capitalisation.Looking to minimise any payment because of purchase later this year of another IP and would be looking to maximise deposit on that.
Most lenders will lend on valuation where the Contract date is more than 12 months old. Therefore, you should be able to borrow 90% of $330k.
Cheers
Stu
woodsman
if you went to a new lender bank now and put it to them at 90%, new mortgage insurer, i think that its a chance to be considered at val figure over the contract figure.
that would be using a mainstream bank as opposed to a non conformer.
i’d be keen for an update as its quite an interesting scenario – nice to see an otp purchase doing what they should.
P.S – all of the above maybe totally wrong – hows that for a professional disclaimer.
cheers
brahms
CALL NOW…adults only (boys and girls ask mummy or dad first) ~~ 1900 hot broker ~~Brahms, new MI’er?!
There aren’t any new MI’ers, or am I wrong?
Isn’t this something that the bank controls ie which MI’er they use
Woodsman you are of course correct – not a new MI’er, just use a different one to the original application – if possible, if it suits.
Different lenders use different mi’ers, some use both – you can choose your lender based on who the mi’er is – therefore match up mi policy to clients needs.
ahh, mortgage insurance….nice work if you can get it..
cheers
brahms
CALL NOW…adults only (boys and girls ask mummy or dad first) ~~ 1900 hot broker ~~I have confirmed today, that not only can I capitalise the borrowing costs (as long as val is sufficient), but I can also borrow up to 95% LVR. [thumbsupanim] Interest rate is 6.5% (I guess 6.75% when the RBA finally puts the speculation to rest[wink])
Almost like they are throwing money at us…..
Hi Woodsman
I’ve had a few clients with similar situations, and was stuck in that they would not lend more than the contract price even tho this was less than 90%. It seems the mortgage insurers can be a bit inflexible at times, and it can depend on who is assessing the deal and how strong the client looks (my clients were not too strong!).
But good luck with it.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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 woodsman. I am in the process of considering purchasing an OTP property and hope my recent experience may shed some light on the flexibility of lenders and OTP companies that may help you situation.
The first step was to get finance evaluated using equity in existing properties. The OTP company’s financier wanted to refinance my existing loans (85% LVR) to 90% LVR of the new valuations ( to be done next wednesday. )
These properties were purchased last March on 3 year Fixed Interest Loans.
I rang my existing Lender at INGBank and spoke to a problem solutions guy who pointed out that I would have to pay break costs (about $3000 for discharge fees, solicitors fees, break costs etc.) And also pay $5000 again for LMI if I refinanced. …………….He was immediately able to offer me the same deal with ING but without the above costs….. and he would waive the usual admin charges too.
I rang the OTP company back and explained that I couldn’t see any reason to pay $8000 on a refinance that I didn’t have to. I apologised that this may have put the finance guy out as he had done a lot of work for me but I was actually a bit peeved that he had fast talked me into something so quickly. In the process telling me that:
1. “the break costs would be no more than $1000” …..IT was more than $3000!!
2. “I would have to virtually pay full LMI with my existing bank anyway to increase LVR as the banks only insure the percentage above 80% whereby private lenders insure all of the loan” I checked, this was incorrect as I would only have to pay the difference on 90% to 85% LVR.
3. “It doesn’t matter because it is rolled into the loan anyway”………….hello. I still gotta pay it back – with INTEREST over 25 years buddy!
So now I have my existing Bank offering me a great deal on a new LVR of 90% in less than 12 months since purchase (equity I didn’t think I could access as they were fixed rate loans) and the OTP company have just come back to me offering $6000 cash back to pay for the exit costs and new LMI if I exit my current loans.
I had already committed to getting Vals done with the OTP companies financier and they told me that these can’t be cancelled as holding deposits have already been paid to valuer. So i will have to get these done anyways.
I will also have to get another valuation done by my existing bank if I stick with them. What the valuations come to may well determine which way I swing.
It hurts a bit paying for two valuations on 3 properties but maybe the leverage I have on two lenders in a direct bid for my money will pay off.
Live, Learn and GrowLifexperience
I apologise for ranting in your thread Woodsman but I just wanted to finish off the story.
I checked with valuer, and there is no problem cancelling val’s. Certainly no such thing as non refundable deposits paid by this finance company.
That was the final straw…… I was fed too much incorrect info by the finance guy for the OTP company…………………
I just called him and explained that for the fourth time he had led me up the wrong tree…….I will have no more to do with his finance company or the OTP company again…………..
…..more screws than a kings coffin….BAH!
………….they won’t be getting a single cent from me….full stop.
I just hope my existing bank comes through with the goods now…….(fingers crossed)
Live, Learn and GrowLifexperience
You must be logged in to reply to this topic. If you don't have an account, you can register here.
