Hi everyone,
Could someone explain some of the in’s and out’s of this for me. I understand that this initially has to be negotiated between buyer and seller, but who works out the repyment schedule, and how is it done. Are there any legal implications that I should be aware of?
For example if I was to purchase a $200 000 property and ask the vendor to leave $20 000 in the deal, what is the process from there?
Also, how do the banks view this. If you don’t have a deposit for them they may not touch you.
Thanks in advance,
Ian
I don’t think many of the lenders will have a major problem with this if you can service the loan from them and the loan from the vendor. You would have to stay out of mortgage insurance territory in most cases though if you did not put any money in as they have a genuine savings requirement. This means borrow 80% or less from a lender.
As for the calculations and repayments, this is also agreed between the two parties. If you ask them to leave 20k in the deal, they may ask for repayments at 10% per annum which, if you agreed to that rate, would have to pay at the agreed intervals.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHi mortgage Adviser,
If I had enough cash to stay out of mortgage lender territory, then wouldn’t it be pointless to ask the vendor to leave 20% in the deal? I may as well use the cash as a deposit.
Thanks,
Ian
What I am getting at is that asking for $20,000 (10% of property value) would mean you need another 20k and the fees to stay out of mortgage insurance territory. If you have the minimum genuine savings requirement of 3% or 5% (depending on product taken), you could possibly borrow the rest if you can service the loan from the lender and the vendor but you would also have to include the mortgage insurance.
Basically, if you don’t have any money, you would need at least 20% plus fees from the vendor, not just 10% as you outlined above because mortgage insurance would not approve the loan. Of course there are those lenders who do not charge LMI but hit you for other fees and higher rates.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
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