How to avoid bank traps when looking for loans

Viewing 8 posts - 1 through 8 (of 8 total)

Barry
Participant
@barrym
Join Date: 2015
Post Count: 2
January 11, 2015 - 9:41 pm
Hi all,
Im wondering if anyone has any advice regarding tricks/traps the banks use against property investors and developers to decline or reduce the amount of the loan they apply for.
Ive heard from a few people in the development game to be “extremely careful” what you disclose to your lender as it is quite easy for them to turn your required loan down or reduce the amount they are willing to lend. For eg: Telling the bank that you want to develop and sell the units instead of retaining them could increase or reduce LVR.
Ive been told that its wise for me to “bend the truth” in your favour when dealing with banks.
Does anyone have any advice or experience in dealing with banks that knock back finance by “trapping” you in a sense?
Any advice would be appreciated.
Thanks,
Baz
Corey Batt
Participant
@cjaysa
Join Date: 2012
Post Count: 1,010
January 12, 2015 - 12:24 am
The best rule of the them all: Use a GREAT broker who specialises in investment lending. A broker works on your behalf, so can find the best lending to fit your needs. Instead of trying to navigate the maze and avoid the landmines, build a team of professionals who can assist you with your needs. You’re going to end up with a superior result, increase your own knowledge and make your investments more successful – without a doubt.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
January 12, 2015 - 5:42 am
Agree with Corey use an experienced Broker who has been there and done it themselves.
Certainly would never agree with not disclosing something to a lender or “bending the truth” as this in turn is Mortgage Fraud and has brings with it severe penalties.
I cannot see why you would use a Broker for your 12 pack development when they own 3 standalone IP’s and are still paying off a PPOR.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 12, 2015 - 8:54 am
Bending the truth is a euphamision for fraud usually. best not to committ a crime if possible.
Depending on the situation it would be best not to use the word ‘development’ anywhere – such as in company names, email addresses etc.
Avoid getting too many properties in your own name – I just had one bank reject a client as a residential lender because the client owned 22 properties. They wanted it to go via their commericial lending.
Don’t put down trust assets on your personal liability statements – as they are not your assets.
Beware of the ownership structure set up. You want to limit personal guarantees. You don’t want spouses involved, where possible. You wouldn’t want to cross collateralise property either. Think that if the development fails what can you lose sort of thing. Use strategies to improve asset protection.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
January 12, 2015 - 11:54 am
Hi Baz
Just use a superstar broker – plenty on this forum to choose from. Call a couple – get a feel for what they offer and go from there.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Barry
Participant
@barrym
Join Date: 2015
Post Count: 2
January 12, 2015 - 5:46 pm
Thanks guys,
Im starting my first development ( Corner block 3 unit site) but i know due to being 23 and having a pretty average income that there will come a point that servicing the loans will be an issue for me.
Ideally id like to do 2-3 developments a year. Im pretty confident in finding the right block and actually making equity on the development. But know that at some point i will hit a wall in regards to not actually being able to make repayments due to my low income. Hence why i asked the question about tips to not be tricked by banks etc.
Would the right mortgage broker be able to structure my investment goals? Or would an accountant be the person to speak to?
Apologies if its a dumb question, I do want to get serious about developing and any advice from people who have gone through it would be much appreciated.
Cheers
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
January 13, 2015 - 5:20 am
Hi Barry
Your Accountant would need to be Licensed to provide Credit advice and most are not.
A Mortgage Broker is required to hold such qualifications.
A 3 unit block is not necessarily the sort of deal you would do as a newbie and many lender will not lend on multi unit dwellings.
Of course still many out there that will do 3 units as a residential deal.
If you intend to retain the property we could also factor in potential rental income with some lenders so that might aid your serviceability.
A good broker will ensure that the lender who does the initial loan will also do multiple units when you come to construct or develop.
Sounds obvious but you will be amazed how many lenders/ brokers will not even think of it. I have just restructured a forum members loan where the Bank told the client they would not do multiple properties on a single Title after the borrower told the lender from day one what his intention was for the property was.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 13, 2015 - 9:40 am
The tax agent could provide tax advice in relation to teh development and structuring, income tax, CGT, GST, land tax, stampp duty etc.
So could the lawyer, but the lawyer could also provide the legal advice such as ownership structure, how to structure companies, trusts, successsion issues, asset protection issues, related party loan agreements, terms of agreements, reviewing agreements.
The mortgage broker could provide all advice related to credit such as which lender, type of loan, structuring submission etc
Investment goals is a broad area and there would be no licencing required, but it borders on financial advice so a financial planner could provide this – but may not be the most suitable in this situation. A mortgage broker may be the best bet if your goals centre around property.
- This reply was modified 9 years, 9 months ago by Terryw.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au