I am planning on purchasing a property using the equity in my current investment property, I am also requiring the equity to cover my deposit too. How do I get around this at an auction when it comes time to present a bank cheque? The details are as follows:
Equity in Investment property: $150k
Purchase price of new property: $350kOur borrowing power is around $900k, so the broker did say we wouldn’t have a problem borrowing the funds, however my only concern is not having a deposit at the auction date should we be the successful bidders.
The Auction is 2 weeks away, so does anyone know a quick solution to this problem?
Many thanks
The morgage I have on our investment property allows us to draw on the equity at anytime. so all i’d have to do is ring them to get a bank cheque sent to me or transfer via internet banking to my cheque acc and then get a bank cheque from my local bank. Hope this helps.
Your Mortgage Broker should be able to help you arrange access to the equity in your I.P
A deposit Bond may be a solution if there are delays with gaining access to your equity before the auction date.Apart from the 20% deposit, you should also consider using current available equity to cover all purchase costs, stamp duty, app fees, legal fees etc, this will insure the LVR on the new purchase does not exceed 80% and will avoid the need for LMI.
Regards
StevenMortgage Broker
Mobile 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.
The answer is that you do not need a bank cheque, all you need is a personal cheque. Just make sure beforehand that you LOC is set up.
Bid away at the auction, and if you win write out a personal cheque. When you get home, transfer the funds (eg phone or internet banking) from your LOC to your cheque account.
Easy as that.
A cheque is no good if there are no funds in the account to cover it,
Mrsimba question relates to organizing access to the equity in her IP to use as a deposit at the auction, and what are the alternatives if the funds are not available before the auction date.Mrssimbas, I would strongly recommend that you speak to your Broker and have your finance/pre approval organised before you bid at this Auction.
And why do members of this forum continue to recommend LOC (Line Of Credits) when in most situations there are cheaper and more beneficial alternative products available?
Mrsimba, ask your Broker about an interest only split with a linked 100% offset account. Cheers.
Regards
Steven
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.
ask your bank if they can issue a deposit bond. this is a financial instrument that the basically shows the auctioneer that the bank knows you are good for the money and will cover the deposit if you fail to. I haven’t done this myself it is from finance theory .
As an ex-realestate agent these are your options:
1. Personal cheque on the day then swap for bank cheque on Monday
2. Give $5000 cash on day then balance on Monday by bank cheque
3. Bring current bank statement showing balance available with withdrawal slip for amount signed. Then on Monday visit agent and bank together to retrieve withdrawal slip/statemement from agent and provide bank cheque.
Thanks for all your responses, I think some of you missed my point though. I do not have the funds in my account, the deposit I wish to retrieve is coming straight from the equity in my existing investment property.
I have spoken to the bank about a deposit bond and they seem to think it shouldn’t be a problem, however when speaking to the mortgage broker they told me that it is a very uncommon situation and the real estate agent may look unfavorably upon us. The broker advised to take out a personal loan, seeing as the auction is in a few weeks time I was hoping for a quicker solution.
Thanks
Why not get a LOC in place now so that you do have fund available by the time of the auction?
Originally posted by mrsimba:I have spoken to the bank about a deposit bond and they seem to think it shouldn’t be a problem, however when speaking to the mortgage broker they told me that it is a very uncommon situation and the real estate agent may look unfavorably upon us. The broker advised to take out a personal loan, seeing as the auction is in a few weeks time I was hoping for a quicker solution.
Thanks
Mrsimba,
Call the selling agent and check if they will except a Deposit Bond at the auction.Two weeks should be enough time to for your lender to organize unconditional approval.
Or another option to consider if you’re pressed for time regarding a full refinance would be to ask your Broker/Lender to organize a short form increase on the current I.P loan.
Regards
Steven
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.
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