Hello,
I am seeking some opinions and advice on the following.
Three weeks ago I bought 2 1b/r apts off the plan in South Yarra melbourne. the complex promises to be a cutting edge, hype building for the Y gen with bars, restaurant, outdoor cinema, etc. It is due for completion in mid 2010. Both apartments that I bought are around 40m2 including balcony (smaller than what I would normally buy). It required 10% dep until 2010.
The marketing company has a list of lenders who have familiarized themselves with the plans and complex, etc, and the lenders have indicated what they would be prepared to lend on the each of the various floorplans. CBA, Suncorp and NAB have indicated that they are willing to lend 80% LVR on my size apartments. The other lenders on the list have indicated 75-60% LVR.
I am feeling a bit nervous at the moment in the light of lenders' credit tightening policies and beginning to wonder whether by 2010, the 3 lenders at 80% LVR might have revised policies in place which can only lend less than 80%, which might make the project diificult for me to finance.
Also, I had planned to fincnace at least one of the apartments on a lo/no doc basis in 2010 as my serviceability for conventional financing is reaching its max. But of course with the talk in past couple of weeks of the uncertainty of the future of lo/no docs loan, I am beginning to wonder if I have over stretched myself in this situation?the worst scenario as to financing would be for me to have to finance at 60 or 70% LVR on conventional loans. It would put a strain on cashflow. there is the option of selling one or both at the time but I imgaine that would still entail costs, etc.
I am wondering what would more seasoned investors would do in this situation? I am open to suggstions, recommendations, etc. Even though I've already paid the 10% deposit and signed the contract 3 weeks ago, should I approach the developer and see they will let me out of one to be on the safe side? In the current market, I might have to err on the safe side rather than on the greedy side?
thanks for any thoughts on the situation.
JNMSince most low docs require a 2 year ABN with GST registration it would be a good idea to register for one now, just in case.
Other suggestions
– To help serviceability maybe you could get a second job for a few months before settlement is due – quit later if need be.
– Keep saving madly just in case.Also, since the settlement is long term, over 12months, most lenders would lend based on valuation, which may help if it rises. Maybe you could try to sell one of them before settlement too.
Terryw | 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
why the hell did you do that? Are you wanting to lose money?
I don't get it. Why you overstretched yourself?
The credit crunch issues were not new and has been for many months
BTW, how much did you buy for both apartments? A real bargain???I agree with the past two posts. It sounds like you are over stretching yourself and taking silly risks. Building wealth isn't an overnight exercise. What's the hurry? Why do you need to buy two properties in the same complex? You should look for some geographical diversification.
Can you pull out of one of the purchases?
Cheers,
Stuart
Thanks for your comments. While at the time it seemed a good idea but I realise now that it was not a good move. I have approached the vendor to see if I can get out of one since it was relatively recent. haven't heard back from them yet. I guess at the worst, I will have to try to sell one before settlement.
I put it down to a mistake and not a well-informed decision. I intend to learn from this.
JNMHi JNM – could you email me please about your purchase. [email protected]
see a lawyer and try to get out of the contract. will recommend one if you like.
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