Hello,
I have been pondering the following scenario and wanted to know what others think.I have studied the positive cash flow business but have decided to buy my / our own home first.
We use 2 contracts. We use one for the purchase at 10% above the market price (this one goes in with the application for the finance at 90% LVR, and another one for the market price to exchange for the vendor.
We want to offer the asking price on a duplex in Southport QLD but want to exchange at 10% above that asking price.
In theory it works like this:-
We buy at the market price without any money.We buy using our FHOG to settle.
We exchange at 10% above the “cash” price allowing this to look like we have paid a deposit.
We are going to offer this concept as a annexture to the contract, as the mortgage insurer only ever asks for the 1st page and the annexture is always listed afterwards.
Hope you guys can help with any suggestions etc but otherwise we will let you know when we have been accepted.
Signed with much anticipationDon Christie
Don
I think the exercise is fraut with danger.
Firstly what happens when the lender notices that your Form 1 Transfer Document and the Contract have 2 different purchase prices.
Secondly you would be committing an act of fraud against the lender and the mortgage insurer and the penalties if caught would be high.
I assure you your concept is not new and has been around for years but don’t get off on the wrong footing with a lender. Any broker that offers you this as a suggestion is aiding and abetting a fraudelent act and in my opinion should be steered well clear of.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Is fraud.
Why don’t you make a concerted effort to save a deposit.
Alternatively if you can get 10% from anywhere you can get a “non genuine deposit” loan.
All the best,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi, I’m a mortgage Valuer. I see contracts that have an overstimated purchase price all the time. The danger is if the bank notices two different contract prices. I know of some lenders that don’t care, they just want the business. I don’t know what percentage of people get away with this, I know it is happening all the time. Especially if you have a very friendly real estate agent (or a fraudulent one), they are out there!
I get valuations all the time with the front page of the contract but if the value looks too high, I value it accordingly. Most Valuers are loathe to decrease a purchase price value because we know that the sale may not go through for the purchaser. Some telltale signs are that the contract is not signed by both parties (vendor and purchaser) but let me tell you, a lot of people are getting away with the 2 contract scenario. I don’t advise anyone to do this although I have not heard of anyone going to jail over it. If anything, the real estate agent would be at fault. Hope this helps.Effectively has been used by developers for years in ‘helping’ prospective buyers get into one of their properties.
Also called Mortgage Fraud for obvious reasons. Besides the 2 contract method, have seen others try a rebate appendix at rear of contract, or stating the deposit has already been paid (need a real shonky real estate agent and lawyer here).
Don Christie, do a search on no deposit finance(legally) here on the forum and you will find some interesting ideas. Personal loans, family equity/loans, credit cards etc are just some ideas.
We have 100% finance coming out for home buyers (no investors yet) which is being tested at the moment but it won’t be ready for a couple of months.
Good luck!
Brendon
Acute Mortgage Reductions
http://www.acutemr.com.au
[email protected]There are many 100% loans in the market already for both investors and owner occupiers…there are loans that will lend you more than 100% to cover stamp duty etc. And these do not involve parnet guarantees or cross collaterisation between propertes…..do some research and you will find them.
Trying to hoodwink a bank into lending you more is not good practice.
Let’s see – many Australian property markets are very slow, flat or dropping slightly at present…you borrow 100%.
In the wrong area you could be underwater for a number of years before CG increases take your equity back into positive territory.
Is this such a good idea?
Sure in twenty or thirty years you’ll probably be fine, but how about the next five?
How does this affect your ability to keep investing in the next few years?
Cheers,
Aceyducey
Thanks Everyone,
I was just testing out the idea with the brains out there and will keep stepping ahead with the home plans.
Don
Forgive me but what planet did you come from??
“Let’s see – many Australian property markets are very slow, flat or dropping slightly at present…you borrow 100%.”
OK lets say you borrow 100% of $100,000 and a month later the property market has fallen by 5% so your house is worth $95,000.
SO WHAT…its not like you are forced to sell at this point or your chickens will stop laying.
Think about a car lease you borrow $30,000 for a $30,000 car and the next day the car is worth $28,000 …nobody takes the car away from you.
Originally posted by Nat R:
[brOK lets say you borrow 100% of $100,000 and a month later the property market has fallen by 5% so your house is worth $95,000.SO WHAT…its not like you are forced to sell at this point or your chickens will stop laying.
Think about a car lease you borrow $30,000 for a $30,000 car and the next day the car is worth $28,000 …nobody takes the car away from you.
Nat,
You are absolutely right – and totally missed the point
The aim for most investors is to not simply buy a property and sit. It’s to buy and buy and buy and buy some more – using equity to leverage purchases.
If you purchase a property & are left with no equity and no short-term prospect of gaining equity it can really slow down your purchasing cycle & significantly increase the time it takes to build wealth.
Cheers,
Aceyducey
don’t think you are for real Donchristie.
You sound more like a Jenman or Bec type person trying to get someone to say something favourable about your suggested illegal fraudulent method so that you have something to write about.
Not that I would ever think that Jenman or Bec themselves for that matter would get up to such dirty tricks.
I guess we will find out by the time you have posted your 100th post.
Pisces
acey: it doesn’t matter if you put 0% deposit in or 20% deposit in and the value goes down you still have less equity in that house to borrow off…so why put any deposit in?
Have I missed something?
Originally posted by Nat R:acey: it doesn’t matter if you put 0% deposit in or 20% deposit in and the value goes down you still have less equity in that house to borrow off…so why put any deposit in?
Have I missed something?
Yes
Cheers,
Aceyducey
It’s fraud.
Will you still be able to respect yourself if you go through with this, even if you don’t get ‘caught’?
Will your (future) kids respect you as a parent if they find out at some stage?
Will your parents respect you?
Will you lose people’s trust?
Even if you don’t care about these things, think about what Acey said: It won’t help you build wealth.
Why do such thing?
Please reconsider!First – don’t even think about it! It’s illegal and will catch up with you somehow, sometime.
Second – there are plenty of 100% loans out there – and now one lender doesn’t require any genuine savings at all ( for costs etc). First Home buyers can get a legit loan with extremely little up front.
Don’t ruin your future!
Max Hugen [email protected]
Alpha Financial
Residential & Commercial Loans
http://www.alphafinancial.com.au
02 9560 3061I am not going to use this strategy.
I was just trying to see if this was a way of doing things.
For some of you who make asumptions and the like are not what this forum is about.
Just because i have not posted much doesn’t mean i have not read this forum alot.
Please do not put others down, Mr Residentialwealth!!
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