What sort of loan can we get?

[JaneLMember@janelJoin Date: 2011Post Count: 8]

July 15, 2011 - 2:53 am

Hi
We own our 1500+ac property outright. It earns about $50kpa in tourism and other ventures. It could earn a lot more. I am hoping it is worth around $1.5-2m but don’t know (I asked this question: https://www.propertyinvesting.com/forums/property-investing/help-needed/4337386)

We want to buy an adjacent block for $450k and sell ours. The owners of the adjacent block want a quick sale and we are very keen to secure it. They won’t include an condition regarding the sale of our place.

We have no debts but we also don’t have the income to service a loan of $450k. We are thinking of a MECU bridging loan at 7.44% for 12 months with capilised interest.
Will we get this loan?
What happens if we don’t sell in 12 months?
Is there another option we haven’t thought of?

Thanks for any advice.
Jane.

[rusty05Member@rusty05Join Date: 2011Post Count: 94]

July 15, 2011 - 3:13 am

Hi,
St George offer a relocation loan which I guess is basically a bridging loan but they do not take income into account because there will be no 'end debt'. It works on the assumption that when you sell your existing place your new property can be totally paid off so your income isn't an issue. A mortgage is taken out on both properties and interest is capitalised until you sell.  The major prob is that the loan is only for 6 months so I don't know what happens if you don't sell within that time frame because you haven't actually qualified for a standard loan.

Personally I'd be a bit wary of not selling within that timeframe, especially in this market but it may be worth having a conversation about??

[TerrywParticipant@terrywJoin Date: 2001Post Count: 16,213]

July 15, 2011 - 3:35 am

You may be able to get a loan on the existing property and/or new property and use this to purchase the new one. Rental income from the new one can be included and will help you service. You can then settle and try to sell the existing one. You may also be able to borrow a bit extra to cover some of the expenses during the cross over period.

Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me

Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

[HomeLoanExpertsParticipant@homeloanexpertsJoin Date: 2007Post Count: 43]

July 16, 2011 - 8:11 am

With the property being 1500 acres it will be unacceptable security for most lenders. Off the top of my head I don't know one that can help with that large a property AND offer a bridging loan. It is a little complicated. My recommendation would be to find out why they want a quick sale and see if you can negotiate around that. There are a few private lenders / commercial lenders that can help with a property that large as security, naturally they are a little (or a lot!) more expensive.

[JaneLMember@janelJoin Date: 2011Post Count: 8]

July 16, 2011 - 12:27 pm

Thanks Otto. Would a smaller block, say 200ac with house (our home title) that’s worth less or the same as the loan be more viable?

[HomeLoanExpertsParticipant@homeloanexpertsJoin Date: 2007Post Count: 43]

July 16, 2011 - 12:30 pm

200 acres is more viable, however still outside policy for most residential lenders. For a home loan most lenders want less than 50 hectares, some want less than 8 hectares! The cheapest bridging loans are types of home loans. If the property is large then you would have to seek more expensive specialist finance.

[ksherwellMember@ksherwellJoin Date: 2007Post Count: 125]

July 21, 2011 - 12:56 am

Why not use your equity?

[JaneLMember@janelJoin Date: 2011Post Count: 8]

July 22, 2011 - 4:15 am

Thanks all for your help. I have learned heaps.
Cheers,
JaneL