Hi.
Could any of you good brokers out there help, please.
Say, I am a contractor on a 6-monthly rolling basis for a number of years on a PAYG. I am a on a good income but have absolutely no savings at this stage (and I know this will be seen as a big negative to lenders).
If I sign a purchase contract for, say $250K, with the terms documented in the Sale of Contract as follow: 5 months settlement, $5K payment each calendar months till settlement date, payable directly to the vendor's agent/solicitor. This means by settlement date, I will have paid the 10% deposit required.
I will need funding for 90% of the purchase price + LMI + all Gov't costs from the lender.
Home will be for living in. Not a first home buyer. No past defaults. No credit card/store card etc. Only $20K Overdraft debt. My questions are:
1. Is there any lender who will give approval in principle on the basis that the 10% deposit is not seen in the account at the time of application, but will be made up of progressive payments till settlement date? This will allow me to buy the property soon, rather than having to wait for half-year later.
2. what is the approx interest rate for the home loan?
3. will the loan for funding the Gov't costs separate to the home loan? and what interest rate?
And just a general question: Do brokers now a day generally charge a brokerage fee for home loan under $250K? How much is the brokerage fee approximately?
If you can help, please email me directly. Thanks.
Regards,
Jenny
Hi Jenny
Welcome to the forum and i hope you enjoy your time with us.
You wont get any lender give you a formal approval without evidence the deposit has been paid in full so i would suggest that you be careful going unconditional without having finance all approved.
Also you wont get any lender lend you the acquisition costs without additional security. You might get the LMI capitallsed depending on a few factors.
Rate of interest will depend on a few things but work on between 5-5.5% and you wont go to far wrong. (Always exceptions but a good guide when starting out)
There might be a couple of ways around this if you can save at least 5% deposit over a minimum of 3 months depending on which State you are in.
Can't comment about all Brokers but we don't charge a Brokerage fee for our services irrespective of the loan amount.
Doing one for a forum client for $46K buying a property in Broken Hill but a good client so we are happy to help out.
Hope this helps. Any questions ask away.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jenny,
Like Richard said, lenders will either need evidence of genuine savings or in the case of non-genuine savings have evidence of the funds to complete. So a promise to pay $5K a month until settlement isn't enough to allow lenders to give unconditional.
You would also need to save for the stamps, etc in addition to the deposit which depending on where you are buying might mean another $10K.
On par with Richard in that the smaller loan amounts doesn't effect the free service offered.
Cheers
Tom
Thanks, Richard & Tom.
I was planning for 10% deposit so to negate the 5% genuine saving requirements. But you mentioned, Richard, that "There might be a couple of ways around this if you can save at least 5% deposit over a minimum of 3 months depending on which State….' Could you please elaborate on what other ways around if I could save at least 5% over 3 months.
The property is in Victoria.
Regards,
Jenny
Hi Richard,
Re. your comment: "You wont get any lender give you a formal approval without evidence the deposit has been paid in full so i would suggest that you be careful going unconditional without having finance all approved". In my previous example, the proposed settlement was 5 months. But if I were to extend the settlement out by another month to 6 months, so that at the end of the 5th month (by which time the 10% payment would have been paid in full), I applied for a home loan. Do you think any lender would give approval, base on the fact that they now could see the 10% deposit have been paid (evidenced via the receipts from the vendor's agent/solicitor)?
Also, would 1 month be sufficient for starting the loan application process to settlement in full? Bear in mind that the vendor and I would have our solicitors in contract well before the loan application process.
Regards,
Jenny
Hi Jenny
Yes i think that as long as you understand the loan would not be formally approval until the 10% deposit has been evidenced and by this stage you may have exchanged contracts.
You run the risk of course of losing your deposit if for whatever reason finance is declined.
You still have to cover your acquisition costs and lenders will want to see this is in hand.
Are you sure the vendor is going to agree to such a lengthy settlement ?
I am assuming it is not a favourable purchase or you know the vendor.
1 month should be sufficient to get finance over the line and settled.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I've done a few simultaneous settlements and odd things like what you are proposing where i thought i would have money received by a certain period of time and ready to apply for the new loans. In the end I don't think its worth putting excess pressure on yourself. Playing devils advocate; what if in the 6 months whilst you are busily saving. What if you lose your job… You miss one of those 5k deposit payments and You lose the others because you would of defaulted on your contract. You run the risk of not getting finance at the end of 5 months … Its not going to take you any longer at all to save for 6 months and then buy a house. You could take 6 months and save, buy a house and be settled in 1 month and in reality you where only delayed 1 month…. Plus a 1 month settlement and you obtaining pre approval at this stage would give you a greater power of negotiation. A 1 month settlement and no conditions or just subject to finance will look far more appealing in a sellers mind then a 6 month contract, unless they have a reason for staying as well. You would be able to negotiate a lower sale price just on a 1 month settlement and cash unconditionally that could save you 10-20 to 30k off the asking price just because you have the money are willing to settle there and then in 1 month over other buyers.
Thanks, Richard & Wilko,
I don't know the vendor or the agent. The contract would definitely be conducted in a business manner; i.e.: not an under-the-table contract. The property is in a semi-regional area and has been on the market for some time. The agent said the vendors are willing for a long settlement because they currently have a good long tenant in the property.
I was tossing between saving for 3 or 4 months for the 5%, then go for the 95% loan as the first option and the second option, which was the monthly progressive payment till settlement date. But my understanding is that it is much more difficult to obtain 95%LVR than 90%, given my situation – no asset and no savings relative to earnings and age. Hence, the reason why I was thinking for the progressive-payments to firstly, reach 10% by settlement and so only need to obtain finance for 90% LVR, and secondly to get 'that property' now rather than having to wait for 3 to 4 months to save for the 5% deposit, by which time the property might have gone.
But hearing all the advices you kindly gave so far, I will have to consider.
But just one more question, please – regarding the upfront costs, I have read in other forums of this website which seem to indicate that there was a VISA facility attached to the home loan that some lenders gave to fund for the upfront Gov't costs – is this still the case? Does this facility required security? From my reading, I thought the facility was like an unsecured personal loan. Isn't there any way I can get funding for these costs, unsecured?
Thanks,
Regards,
Jenny
Another fact that I thought 95%LVR wouldn't work was because even though I was planning to live in it at first, but I may soon later rent out part of the property (the property has a bungalow at the back with full utilities, but not separately metered. Once I have put in separate meter boxes, there is a high chance that I will rent out part of it. Which part I will rent out will depend on whether separate meter boxes can be serviced for the bungalow – if can be done, then I will stay in the bungalow and rent out the front home; but if can't be done, then I will stay in the front house and rent out the back bungalow (and adjust the rent to cover all utility costs).
I am aware that lenders don't generally lend 95% for investment purpose – hence the reason for 90% LVR.
Regards,
Jenny
Qlds007 has access to a product that can provide 100% financing with a secured and unsecured component.
Lenders are fine lending to 95% even for investment purposes. Such as subdivision, splitting titles. Provided you pay your LMI and that you have enough security at the end of the transaction.
Hi Richard,
Wilko mentioned above of a product that can provide 100% financing with a secured and unsecured component. Do you still have such product and if yes, could you please let me know the criteria. Thanks.
Jenny
You must be logged in to reply to this topic. If you don't have an account, you can register here.
