Hi all ,
Hoping somebody can shed some light for me regarding construction loans .
Is it possible to obtain finance for construction under my name only when the loan for the vacant land is under joint names ( wife and I ) ??Reason being , when we financed the land we both had listed defaults on our files and and was allowed a max 80%LVR , that was ok , we saved hard and got it .The next plan was to hold for 6 months and get a re-val plus the FHOG ( $20k) for the deposit . Now our lender will not re-value our land for the construction until May next year . We have comparable sales figures showing a minimum $35k value increase since we purchased . The catch is that during the last month my credit file has been amended and is sparkling clean while the wife still has 2 small defaults under $500 each ($421 & $370) which are from 4 years ago .
So , is it possible to apply under my name only now with a different lender . We don’t want to wait that long as our rent is the same as our future mortgage repayments
Thanks to anyone who can give some advise .
Brad
Since both people are legal owners both must be on the loan or loan in one name and the other giving a guarantee – but this is likely to require a credit assessment too.
Probably best to speak with a broker as small defaults can usually be overcome.
(ncidently, this is another good advantage to use a trust with company trustee – you can just change people around without having to change ownership. but may not be suitable if owner occ)
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
Terry has done an excellent job of answering the legal bit.
In regards to the construction loan it maybe possible to do this subject to the overall lvr however hate too say you will need to refinance as the loan on the construction portion will need to be with the same lender who holds the land as security.
Depending on when the defaults were paid and who they were in favour of i can think of a couple of lenders who might look at it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Most if not all banks will not allow you to “re-value” after a short period of time, need to wait atleast 3-6 month.
Refinancing to another lender will be very costly given you had your loan for less then 6 month with your current lender…..1. App fee
2. Switch cost
3. Legal
4. Mortgage deeds prep
5. Early dis-charge feeSo the question is; how long have you been with your current lender and who is it with?
As Richard mentioned, depending which lender your with…they may be able to take your loan to 90% ( with LMI, given that your file has cleaned up now).
If your desperate to build ASAP, and your able to absorb all the fee/charges for the early switch then i suggest you contact a broker to find which bank will suit you the most for the refinance + get a valuation done BEFORE your consider switching ( i would kick my self, if the value with the new bank is the same….pointless)
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Thanks so much for the comments so far !!
We will have had this loan for 6 months at the end of October which is when we would plan to re-finance. The loan is with loan star as at the time they offered the best rate for our credit situation. We are fairly confident the valuation would come back at a min of $30k more than we paid considering we first put our deposit in July 2010 . We would just like the lender or “a” lender to do the re-val at the end of October as was planned . We plan to spend around $220 k max on construction so would require around $44k as deposit , $20k from the grant and the rest in equity if it is available as to stay at 80% LVR . I understand my current broker is trying to protect us from breaking fees and such but the rent we will pay in the meantime will add up to at least an extra $10 – $12 k if we wait .
Thanks again .
Never heard of loan star- But there are thousands of Mortgage manger’s in Aus…. looking at their site i still can’t work out who the “lender is ; this would be on your loan contract when you first signed…who is the “lender/bank” …loan star is just the ” brand ” or provider….
If it’s coming up to 6 month in Oct then loan star should be able to do a re-value…unless it’s their policy not to ( as i said i dont deal with loan star , so won’t know).
What was unique about your credit situation? Low doc? self employed?
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
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