Hi all
I’ve been trying to find a solution where I can actually to borrow based on property value rather than contract price. It seems that it’s impossible to do since all the lenders lending on contract price. But at the same time in all the books on real estate investing it outlined as one of the strategies to leverage your investment.
Basically, I bought property off-the-plan for 320K where I have prove of sales the same property within the same development for 335K. The development is in Quakers Hill, NSW. It’s 2 + study Town House including one car garage, air-condition and other fixtures (dishwasher, stove etc…). The prices around this area gone up recently due to M2 highway to connect QH. The smaller by size Town House but 3 bedrooms is selling now for 350K – 360K. The IP that I signed a contract will be ready in August, 2003 and I have 3 more month to settle based on contract conditions.
Would anybody have idea/s how to convince lender to lend the money based on market value of this property.
Thanks
You could get the property revalued in writing by a professional & respected valuer and then present this evidence to the bank, No garantees they will accept it because usually they like there own valuers to check it out.Maybe you could ask the bank to revalue for you ?
MJK
Gather as much evidence of higher sales collate it then ask the bank for a list of valuers they use. organise a valuation and be there when its done. show the valuer your evidence and you may have a fair shot at convincing him and the bank. remember that a valuer may do 8 or more valuations a day. this means a hell of a lot of travelling and research. If you can do some of that research for him, as long as it is backed up by evidence im sure he would be happy to take that info on board.
Thak you for your inputs. The question is whether real-estate agencies can provide information on prices of sold properties? Does anybody have any experience of collecting such information that is good for lenders and valuators?
Hi Smoke,
First of all, there are some banks willing to lend on market value. From memory I believe St. George are one of them. Check with a broker it may be easier.
In regards to your second issue, if above option fails I would approach the bank and find out who are on their list of valuers, I would then use one of these, it would then be almost impossible for the bank to deny.
Please note in regards to the other property sold in the same complex for $335k, is it the same size as yours? Note: not including balcony size.
Regards,
Mannie.“It’s too late to go back and make a brand new start, but from today you make a brand new end”.
Hi Mannie
Thanks for advice. The other property sold is ecxactly the same size and shape. It’s within the same development where thera are only 2+study two units.
Thanks
AlexSmoke
It depend on when you signed the contract. If it is more than 12 to 18 months ago, then yes you can get a loan based on valuation with a standard bank at standard rates. And this is with LMI approval.
If it is a shorter settlement, then you can still do it, but rates will be higher as we will have to go to smaller lenders or private funds.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Smoke
You may want to check out my article on this site about this very topic. See https://www.propertyinvesting.com/freestuff (its the first article).
Property valuations for mortgage purposes generally have a tolerance level of plus or minus 10%. Therefore, a valuer would have to be convinced by strong evidence that the fair market value of your property is more than 10% higher than the contract price. This is often difficult to support. The exception is off-the-plan purchases as there’s often a substantial amount of time between contract signing and settlement date. Hence, there is a very good reason for the value differential.
Remember, the valuers don’t want to stick their necks out too far becuase they might get sued.
Just thought I would add my 2 cents.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auOne technique I’ve heard of (but haven’t done) is to refinance with a different lender. Because you already own the property, the contract price has no relevance, and the new lender will use the valuation price.
Hi Smoke,
Are both properties on the same floor? As price varies between floors.
Are both properties enjoying the same aspect?
Is one looking at the mountains where the other is looking at the ocean? (I doubt this as there is little difference in price)Mannie.
“It’s too late to go back and make a brand new start, but from today you make a brand new end”.
Stuart
Thanks for advice. I’ve read the article. The problem though is that the time is too short for my off-the-plan property – only 6 months. But I’ll defenetely try.
Louise
Can’t do that since the property is off-the-plan and has not been settled yet so the title is still not mine.
Mannie
Unfortunately there’s no ocean nor mountains in Quakers Hills. Both units are Town Houses and next to each other. Therefore they are completely identical. I can provide copy of exchanged contract on the second unit but the question is would that convince the lender? As Stuart mentioned it’s less than 10% diffrence in price.
Sorry Smoke,
I totatly forgot it was a townhouse development.
Mannie.
“It’s too late to go back and make a brand new start, but from today you make a brand new end”.
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