Hi everyone
I have a question about getting A LOT of money together to finance a deal.
We want to purchase a property for about 1.5 million. This property would have a 10% return. We currently own property (all returning 10%) worth about half a million with about $400000 owing. One of us has a relatively well paying job and I am currently on maternity leave from another well paying job.
Any suggestions about where to go, what to do etc. would be appreciated
Hi J & K
With $500.000 in current value and a balance of $400K you have $100K in available equity at 80% LVR to contribute to the new $1.5mill purchase,The new purchase financed at 95% LVR = $75K deposit required, that leaves $25K for closing costs stamp duty etc and possibly LMI, this will be tight, If this is the case and you come up short you could extract equity at a higher LVR from your current portfolio,
Of course this is all hypothetical subject to income, borrowing capacity, type of purchase, lenders policy & current LMI exposure etc, Cheers.
Regards
Steven Crane
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Hi Jaradnkaren
A couple of things you can consider? Is there libel to be good capital growth in the property over the next few years? If there is then you can look for a money partner to come in with you.
Secondly is there room for adding value to the property in the short term? If there is why not offer a longer settlement period and value add to the place, paint, landscape, fix it up. Then get it revalued before settlement and use the extra as more deposit: could make all the difference to the lenders giving you a loan.
Kerwyn.Hi Kerwyn
Thanks for your reponse.
I’m (obviously) new to this game so I don’t understand completely how that works. It seems like a catch 22 situation to me. Why do work on a place unless the contract is unconditional ( which would mean finance in place) and how do you get finance in place without doing the extra work to increase the value?
Thanks
Karen
Hi Jaradnkaren
To do the second scenario you have to do a number of things.
First approach a lender and tell them what you have in mind and see if they will give you pre-approval on what you are going to do.
Secondly ask the lender what valuer they use then have a chat with them to see if you do Y to the property it will be worth X.
Now the critical part to doing this is to make sure you can get a long settlement, you will need it. Also to make sure you have your costing correct.Have you thought about asking for a second mortgage carry back with the vendor? If they will give you a 10% second mortgage even if it is only for 1 year you will have enough time to get the place fixed up and revalued. You then pay the second mortgage out and the place is yours. Sometimes they will do this especially if you refrain from low balling them and offer close to the asking price or even a few thousand more. If you are sure you can add a lot of value to the place it is a good way of getting what you want by giving the vendor what they want.
Kerwynj & k – this looks really unlikely – your borrowings are already 80% (400/500=80%) – even refinancing to 95% only gives u $75k – which is zip if u want to borrow 1.5m – very unlikely to get a bank ‘big kev’d’ (I’m Excited) about this.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker Brisbane
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