I am about to purchase property in the new Wyndham Cove Marina. I am high on their list of those that have registered and will have the opportunity to secure a prime piece of waterfront real estate (and a marina berth) in this new development. The initial land release is significantly oversubscribed and appears to have very high demand.
I need to finance the 10% deposit in January 2010, but won’t have cash freed up until late April, when an investment will release significant funding (more than I need for the deposit). Titles for the development will not be released for at least another 18 months at which time settlement will take place.
I have asked the vendors if they would accept a deposit bond, they advised that they can’t, but would accept a bank guarantee. I am not in a position to offer any property as security against a bank guarantee. I work for one of the major banks and have access to personal loans at very low interest rates.
I imagine that I would qualify for a personal loan to see me through, but really would prefer not to tie up my capital or pay interest anyway. My strong preference would be to arrange for a personal loan to back up the bank guarantee, but not actually draw down on it at all (or at least wait until settlement, if required at that stage). This way I don’t actually have any interest costs, but the preapproved personal loan would ensure the bank has the money available if required.
Is anyone aware of this as a possibility? It seems to be an ideal solution for me, but I need to make sure it is a viable option.
Hi, I own a block of land outright and i want to build a house on it and and sell it. Am i able to use this land as equity to build the house and does this mean that i wont have to borrow money from the bank?
mattnz wrote:I am about to purchase property in the new Wyndham Cove Marina. I am high on their list of those that have registered and will have the opportunity to secure a prime piece of waterfront real estate (and a marina berth) in this new development. The initial land release is significantly oversubscribed and appears to have very high demand. I need to finance the 10% deposit in January 2010, but won't have cash freed up until late April, when an investment will release significant funding (more than I need for the deposit). Titles for the development will not be released for at least another 18 months at which time settlement will take place. I have asked the vendors if they would accept a deposit bond, they advised that they can't, but would accept a bank guarantee. I am not in a position to offer any property as security against a bank guarantee. I work for one of the major banks and have access to personal loans at very low interest rates. I imagine that I would qualify for a personal loan to see me through, but really would prefer not to tie up my capital or pay interest anyway. My strong preference would be to arrange for a personal loan to back up the bank guarantee, but not actually draw down on it at all (or at least wait until settlement, if required at that stage). This way I don't actually have any interest costs, but the preapproved personal loan would ensure the bank has the money available if required. Is anyone aware of this as a possibility? It seems to be an ideal solution for me, but I need to make sure it is a viable option.I can't see how that could work. a pre-approval is not an approval. Even if you had a full approval I can't see how it could work without drawing down the loan
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
Ray
Yes you can use the land as security for the construction but will need to borrow against it to fund the building.
Richard Taylor | Australia's leading private lender
Thanks Terry, I’ll try it anyway. I don’t need to draw down the loan, I just need to have the facility to access the funds that are being guaranteed by the bank.
With a personal loan, do they have the equivalent of an offset account? If so, that is another way I could do it potentially. Borrow the money, but hold it in the offset account as security for the bank guarantee.
Hi Matt
Not being funny but if you work for one of the big Banks wouldnt you know about the internal works of your own personal loans.
If not rather than Terry or me try and answer your questions wouldnt it be easier to ask someone in the office that does.
Richard Taylor | Australia's leading private lender
Some personal loans have redraw, but never heard of one with an offset. You could not use this anyway as you could just withdraw the funds. You may be able to use a term deposit as a guarantee – but you might as well just pay the deposit rather than borrow at 6% and ivnest at 5% and then pay the guarantee fees.
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
Hi Richard,
I work in a specialist part of the bank head office that doesn’t deal with lending.
Just trying to find out what options are available in the general market. Also currently on holiday in NZ, not in the office. I’ll look into it in greater depth internally when I return.
Yeah I had thought of that Terry, borrowing the money at a higher interest rate, to fund a term deposit to secure against the bank guarantee. It has the same net effect as what I want to do. It would save me money however compared with just outright borrowing the funds.
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