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You could have been forced to buy the property. Best case secario, you would have jsut lost you deposit, worst case, you would have had to come up with any short fall if the property subsequently sold at a price less than what you agreed on (plus costs etc).
Terryw
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I beleive that is how it works!
Terryw
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There are many ‘silly’ clients out there who take the punt on option 3!!
It is possible to get a valutation done when going for the pre approval, but if you don’t go ahead you would be charged the valuation fee – usually. So most people just go for the pre approval, then sign subject to finance within 14 days (or so). This gives you time for the bank to order the val and get it back (up to a week sometimes) and then process it and give you the full approval or rejection – and then you can safely backout.
Terryw
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Hi Woodsman
I’ve had a few clients with similar situations, and was stuck in that they would not lend more than the contract price even tho this was less than 90%. It seems the mortgage insurers can be a bit inflexible at times, and it can depend on who is assessing the deal and how strong the client looks (my clients were not too strong!).
But good luck with it.
Terryw
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You should talk to a solicitor about this. It may be better to leave things as they are, or for you to buy her share. There are special stamp duty exemptions for transfer of title to spouses due to divorce and separations.
Terryw
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Don’t worry too much. Randwick is a good suburb long term. You just have to get over the inital hurdles.
You couldn’t lock in a rate for more than 3 months. (the lock in fee is usually 0.15% of loan amount).
Usually 95% loans go to a max of $500,000, so you should be OK if this is the pp.
Most lenders will be able to do you unit, it just depends on what features you need. ANZ would be good as you could capitalise the LMI (ie add it on the loan, not having to come up with the $13,000 or so extra it will cost you!).
The good ones don’t stay very!
Terryw
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Still, making $7000 for a few weeks (?) work is not bad. You could just go out and find another property.
Terryw
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Dave
I did the same thing!
Terryw
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Or if you had used a trust, you could then distribute the gain to the lowest income earner and pay much less CGT.
Terryw
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If you sell, in addition to the costs, you will lose any future capital growth.
Terryw
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I am not an accounant either, but what you have done appears OK. I think you can apply for the FHOG after you have moved in. You should know soon anyway!
Terryw
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I owuld just go through the lender to get the valuation. No need to double up, and it would save you about $300.
Terryw
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It could be possible. If you lived in the property, you would save rent and it would be easier to renovate, and you would not have CGT to worry about.
Terryw
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I don’t think Steve suggests people buy in small regional towns. I would not suggest this either. Making $20 per week cashflow with no growth potential is pointless. What happens if rates rise, or the hotwater system bursts – there goes your cashflow. And what happens if prices drop?
However you can get both cashflow +ve and high growth. I’ve seen it happen, and have done it myself.
Terryw
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Yes Banks try to steal our customers all the time. especially NAB I hear.
JPD, You have to remember that large banks are bureacratic messes. There are many staff there just going through the motions, not caring etc. There are so many departments and sections that things go missing, and nobody wants to take any responsibility.
Terryw
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Profiteer.
In that scenario, a company would own the property as trustee. ie its the trusts asset. So profits could be distributed to any of the various beneficiaries – not necessarily the company.
Trusts cost as little as $137 to setup and can go up to $10,000. Companies cost another $900 +. You will also need to get the trust deed stamped = $200 in NSW.
Terryw
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I went to a meeting yesterday regarding the new products. Rates haven’t been sorted out yet, but they were expecting a rate of around 8.50% for a 90% LVR as a low doc. This is high, but much less than the rates on existing 90% low docs.
The mortgage insurer is different to the one mentioned by Tony above. I have forgotten the name of the company now.
Terryw
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Mr VIP. You will also need money for closing costs – about 5% of PP.
Terryw
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Land tax is a progressive tax – the more land you hold the greater the percentage. There is also a threshold where no tax is payable up to a certain limit. You had better find out what these are in your state and plan accordingly.
After a few properties, you may consider setting up a trust. These will have to pay land tax from $1 value (ie no tax free threshold), but you can then keep setting up new ones for future property to keep the tax in the lower threshold
Terryw
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Hi Wayne
Banks get a bit scared when people want money to start up a business – probably because a high percentage fail. They also charge a higher interest rate.
A better way maybe to apply to increase your loan for investment purposes.
But you figures are not entirely correct. With LMI, you could increase your loans to 90% of values – if you service. $465,000 x 90% = $418,500. Available money would be this less current loans which will equal only $83,000.
If you are starting a charter business you may be able to lease boats and some other equipment.
Terryw
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