[Hopeful1Member@hopeful1Join Date: 2009Post Count: 5]

October 7, 2009 - 12:47 am

Hi crj

Before I answer, thanks to Kylie for your advice and suggestions.

Of course Yossarian I have taken the advice on board. That is why I started this in the first place. I wanted advice not criticism.

Does anybody get themselves into this position by choice?
 
We have found ourselves at this point, because we trusted a broker who promised everything and ended up doing nothing and still to this day has not said that it couldn't be done. He just stopped answering my calls. So, because we are naive, we let it go almost to the point of no return by trusting him, and now we want to finish what we started and not let him ruin it all for us. We were never supposed to be in this situation, but our loans have blown out because he didn't get what we asked for and there were so many delays and extra costs involved that has brought us to now.

Probably what I was hoping for from this forum, was that one of the brokers on here would have said that they knew of a loan, at not too high interest, that would enable us to get higher than 80% low or no doc that would give us a buffer for the time that we would move out of our house and then establish it to holiday rent – and finally we would earn some income over the coming holiday period. That problem solved. Then we could move ahead without all this pressure.

But now I know its not that easy.

Our current situation is that
1. My husband is working casually. It is helping us to catch up on bills but is not recognized by banks for 12 months
2. We are in the process of applying for a low interest credit card 
3. We will apply for a business loan – which is very involved as there is so much information needed to prepare financial plans etc which I have no knowledge of at this stage
3. We want to move out and rent – but can't yet because we have no money for a bond. So we have to wait.

We have thought about renting this unfurnished too. But that won't cover the mortgage etc. Holiday rental is the way to go in our situation.

At the end of the day though, any way that we can keep this house is a good way!

There is one thing I have thought of after reading other posts – can we start an SMSF and sell half of our house to it? I have read that you must be arms length and we wouldn't be living in it others would be renting it, and if we get the business loan (hubby has had ABN more than 2 years) it would be business premises? I'm not sure about that so is anyone can tell me more, that would be great.

So at this point we are still hangin' in there, but only just!

Still Hopeful1

[Hopeful1Member@hopeful1Join Date: 2009Post Count: 5]

September 16, 2009 - 1:07 pm

Thankyou for that suggestion Erik and also for the encouraging comments about giving it a go. How easy is it to get a private loan and what sort of interest and payback time would we be looking at? 

Most people here seem to think that we just want to borrow money to pay debt. That isn't really what we want to do, we are in the situation where one property will be making a lot more than the mortgage on it and will definitely be paying for itself with money to spare. Isn't that what the majority of property investors is aiming for – positive gearing?

We want to do the same thing with the house we live in at present, but our problem is that we don't have enough 'startup' money ie to furnish and establish the house as a holiday rental. Once that is done and its renting, in not too long, the money that we need at present would be paid back and we'd be making money. Spending money to make money. Isn't that the whole making money out of real estate theory? Aren't there people on here who, in the past have scrimped and borrowed and 'got into debt' to put down a deposit on that 'must have because its such a good buy' property? And in times past, I'm sure there would be people here who have borrowed 100% or even 110% to buy a property, when it was possible. 

Now why are most of the comments directed towards me negative? Get a job, earn some money, sell while you can, get out quick.

What I'm really asking of anyone here, is how do we get between 10 and 30k to enable us to do what we want to do? Private money? Is the Westpac low doc 82% still possible? I think all the interest we owe will be capitalized and therefore would not be viewed as unpaid payments – is that right? Are there any lenders around who will lend between 82 and 85%LVR on a low doc? Should or could we get a visa or a personal loan? Or would the Private money be easiest and best?

I am just trying really hard hot to let go without having given it my best shot. Do you all really think, we should give up the CG's that a house valued at 650k now, can give us in the future, and just sell it – all because we can't come up with, what is, in the big picture really, peanuts, to furnish and establish it as a holiday rental, that will make us money.

[Hopeful1Member@hopeful1Join Date: 2009Post Count: 5]

September 12, 2009 - 8:22 am

Thanks for your suggestions crj.

There was a sale for 725k last month and there is one across the road on the market for 650k. Ours were valued 2 weeks ago at 650k each. Valuations usually seem to be a bit lower, so we might get a bit more than that if we sold.

I have thought about permanent rental too, but we won't get as much as we would if we holiday rent it. But, then again, when you factor in the cost of furniture, it would take a long time for the holiday rental income to pay for the mortgage AND the furniture. So, maybe that is the way to go. We'd probably get enough to pay most of the mortgage, so it might be worth seriously considering.
I realise things aren't the same as they have been, I believe lenders would lend up to 95% LVR on low docs previously. Thats what I need now!!!!

************But at the moment as your bank would see it you have chosen not to give priority to paying your mortgage, and if my reading is correct have not paid anything off for 5 months, soon to be 6.  Until you start making payments whatever equity you have is being eroded rapidly.  ************

We haven't 'chosen' not to give priority to our mortgages. We just haven't had enough money to pay them both. You don't get far with $700 a fortnight income and a $2000 month mortgage.

We are novices in this field and thought the bank would see things as we do because the existing rental has proven itself. But we didn't realize it would be so hard. And even harder than it had been before to get things through.

*******What did you tell the bank three months ago, was it that things had turned around and you would meet the August and September payments?  If so, you have no credibility – why should they believe you that things will be different**********

We told them our plans, they agreed it was a good idea, they capitalized the arrears, we applied for an increase to our loans based on our plans and 3 weeks later they didn't approve. The HFM also agreed that our plan is a good one but he had no 'power' to change the decision.

Since then we've been trying to work out ways out of this – and we still are – thats why I'm here!

[Hopeful1Member@hopeful1Join Date: 2009Post Count: 5]

September 12, 2009 - 5:19 am

Pully
Yes everything was very different when we started. We were in a good financial position.
Then the broker took forever to do things, didn't get what he said he was going to, made us trust him and now has disappeared. Told us he could do things that clearly he couldn't. And we believed him. We're not happy with ourselves about that.
The property has been holiday rented since November 08 (after sitting empty for 6 months waiting for the broker to refinance so that we cold buy furniture). It made 23k in 7 months and should make approx. 40k over 12 months. Plus we have a contract for midweek non peak bookings which is worth 14k. So all up about 54k. And the mortgage is 25k. So we're making more than enough to cover the mortgage.
Why don't others on here and SS think we should fight to hang onto that any way we can? And if we do the same with the house we'd live in we'll be sitting pretty in not too long at all, especially if house prices start to increase again.
*********how do you expect to service the loan, plus the arreas, plus the exsisting mortgages?**********
The above explains how we expect to service the loan, and the arrears will be capitalized so in effect we don't owe anything. As soon as we start to rent this house as well then they will both look after themselves.
I'm looking forward to that day  the stress is getting too much.
Previous comments have suggested that we can't get a low doc because of the arrears but if the arrears are capitalized and not owing aren't they gone and not viewed as arrears?
My husband is working now, but its only casual. It will be enough to support us if we aren't paying 2k a month on a mortgage and just renting, but not good enough for the banks to even consider for a full doc loan.
We are sure that we can manage all of the payments on everything – perfect for a low doc and my husband has an ABN. So I think we fit the criteria, don't we? Are there any low docs that are above 80% LVR around at the moment?
Thanks for your constructive comments!