Urgent finance help needed! want to make an offer...

Hi Guys,

I was hoping I could get some feedback from all the mortgage brokers here.

This week, out of the blue, we have come across a house that we would like to buy (upgrade our PPOR).  However, after dealing with my broker in Perth he has told me that we won't be able to raise the $$$ required, unless we sell our house.

Therefore I have just called the agent and offered $668k with a subject to sale, though the agent said that the owner will most likely not accept a subject to sale.  We are still waiting for a reply, however if this is the case we will be quite disappointed so we are desperately looking to see if there are any other ways to raise the $$$ without having to sell our house and be able to make a "subject to finance" offer.

Okay, here goes;

CURRENT SITUATION

Current PPOR is valued at $430,000.  We have a LOC on this house of $100k, which we currently owe $75k on.

We have a share portfolio of $48k and we own two vehicles to the value of $60,000.

We have one credit card of $2,000.

I work as a sub-contractor and my average earnings are $1400 per week (have bank statements showing this).  My wife doesn't work as we have just had a baby.

HOUSE WE WANT TO BUY NOW!

- The house is on sale at $679,000
- stamp duty is $27,000
- fees approximately $5,000

Total to be borrowed: $711,000

We also want to spend approximately $15k on the house initially though we are happy to wait until our PPOR is sold before doing so.

The plan would be to get the loan for the new house, then as soon as we sell our PPOR we would pay of our LOC and would put the remaining on the new house.  By doing this we would end up with a mortgage of around $350k which wouldn't be a problem to service. (I'm also in the stage of getting a pay rise too, and my wife will eventually return to work on a part time basis)

PROBLEM

The issue that I currently have is that my last financial year income statement shows that I only earned $37,000 as I was between jobs.  I now contract fulltime to a roofing company and earn approximately $1400 p/wk.

My broker has said that because of this our only option is to go for a 60% low doc product.  I asked him about a 80% product though he said he spoke with ANZ (the bank that offers the 60% product) and they won't lend us the 80% due to serviceability issues.

Okay - so there's our problem.  We would be much appreciative if someone could respond and let us know if there is a way to get our dream home! 

Ideally we would like to make an offer this weekend so If you require any more info off us - just ask and i'll post it straight away.

cheers all,

Wayne & Lisa

Hello

Probably low doc may be the way you would get it through, and if serviceability is the issue, then the banks are scaling back to 60%, and not doing 80% unless income/ serviceability and assets is quite high and can be proven.

The banks and the Mortgage Insurers at the moment have tightened up a fair bit and they will currently really assess serviceability, as the current circumstances is that you have not sold your house yet, tax return they are going of is not meeting their serviceability requirements and the bank is probably thinking it is not currently for sale, there is no contract on it or unconditional contract and what happens if you cannot sell or it sells for a lot less- so they are really looking at the current circumstances nor the projected or planned strategy.

If you really want the home- I would put it up for sale asap, try to get a subject to the sale of, and also as soon as you get an unconditional contract, put your case forward again to the bank for a lesser loan or different % low doc.

Call me old fashioned but i must admit i cant see why you would get finance for this deal.

Ok admit i might be a little awkward to put together but if it was straight forward we would all be Mortgage Brokers.

All you need is $711,000 plus sufficient to repay your existing loan or have i missed the thread.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

Hi Richard,

I assume you were meant to say "why you wouldn't" get finance...?

The issue at the moment is that using the 60% rule, the banks will only lend us $665,000.

However, we also need an extra $75,000 to pay off the LOC and $31,000 for stamp duty and fees.

This leaves us $106,000 short.

cheers

Wayne

Hi Wayne Yes you are right sorry missed out the n't.

Way you would do it is one at 60% and 1 at 80%.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

Hi Richard,

Please could you expand on this?  Which one would you have at 60% and which one at 80%?

And if currently we arn't currently able to get a loan at 80%, why would we be able to in what your proposing?

thanks for the feedback:)

Rgds

Wayne

There is only 1 lender doing lodoc refinances with "cash out" over 60% so choice is limited.

You would keep your place to a 60% refinance and use the funds raised as deposit and acqusition costs to go to another lender and do a 80% lodoc purchase. 

As long as you have held an ABN for 2 years and are registered for GST then 80% lodoc on a purchase is an option.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

You may not need low doc. If you are contracting full time to just one company you can be treated almost as payg.

You need approx 790k in total against two properties worth approx 1.1M. If you can show you can meet interest for 12 months ( plenty of time to sell) you should be OK.

You can use your 48k towards the 12 month interest ~ therefore must be able to service the end debt (after you've sold) or the balance of interest (annual interest less 48k) - higher of the two.

It is the type of deal that comes down to presentation - I would go to CbA or Westpac and say you will only deal with a relationship banker - branch network might struggle with it. A good banker should be able to mitigate your income. Banks also favor existing clients - if you want a hard deal approved your existing bank would be most likley to do it.

Well I don't see why you can't - unless your ABN is less than 24 months?

I'm based in Perth - drop me a line via my email and we can have a chat.

William Cheng - Licensed Finance Broker
williamc@raybackhouselifespan.com.au

Probably low doc may be the way you would get it through, and if serviceability is the issue, then the banks are scaling back to 60%, and not doing 80% unless income/ serviceability and assets is quite high and can be proven.

The banks and the Mortgage Insurers at the moment have tightened up a fair bit and they will currently really assess serviceability, as the current circumstances is that you have not sold your house yet, tax return they are going of is not meeting their serviceability requirements and the bank is probably thinking it is not currently for sale, there is no contract on it or unconditional contract and what happens if you cannot sell or it sells for a lot less- so they are really looking at the current circumstances nor the projected or planned strategy.