Is it generally more difficult to obtain finance for an IP which is subject to flooding (inside the home) in a 1-in-100 year flood?
safe as
probably linked to your deposit and whether or not a val will be done. if you can share these items and the postcode we could offer more detail i think.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneThere would be 20% deposit, but funded from other equity. Postcode is 2480. An independent valuation could be done if needed?
What relevance is size of deposit to floods?thomas
Do you live in NSW also and would it be a standard Real Estate Contract?
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
I have just done one in NSW – it was a bit of a nightmare to be honest but we got it over the line. The floor level of the house had to be above the highest previous flood level and the clients needed to get a survey to do this. The clients were borrowing 80% so perhaps if the LVR was lower they may not have been quite that strict.
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]I have done several in the Q100 range and they were not a problem just the LVR needs to be <80%.
Just bear in mind if you purchase such a property you may wish to sell it one day and the number of purchasers with 20% deposit maybe limited.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Funny enough one of my valuations come back today with the valuer saying the area is floor prone. The lender now wants a Section 147 certificate (this is NSW) to show how prone the area actually is. If it is more than 1/100 year flood, then the lender will not accept the security.
Haven’t previously come across this.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
Yes, the area is a well documented flood prone area. The agent upon quick enquiry was able to supply a copy of the Council’s documented flood information for the property. The 1/100 year flood level would enter the interior. This occurred in 1954 and 1974.However, because this is a classic flood prone area, its 1/100 year flood levels are so high that in other areas the houses would probably disappear!
The property is raised up, ie a second story with garages underneath. Other properties in adjoining streets have been selling fairly quickly for good prices (no slump here), but they would not be affected by the 1/100 year, but they would be affected by the 1/10 year flood, this last happened in 2005 and 2001.
Sound difficult, but many buyers in this area’s price bracket would struggle to get 20% deposit. This property would be cash flow positive but I wouldnt want to almost die trying to get finance. If I struggled to get finance due to flood, anyone I would wish to sell to would most likely also struggle.thomas
Good point with regard to resale. As Terry mentioned the lender may also require a flood certificate from council. Some councils will not issue them for certain flood zones (eg. Port Stephens Council will not issue flood certificates for Salt Ash) so i would also make enquiries with the council in regards to what they will and wont issue.
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]We’ve just bought 2 houses in Vic on a block with a flood innundation overlay – says land subject to flooding 1 in every 100 years. Last flood was 1950’s, but both houses are older than that (one over 100 years old!). Council told us they’ve taken extra measures since the 50’s eg constructing a new dam upstream and generally maintaining the river and keeping it clear and flowing well and that now risk is 1/200 yrs.
We had no problems with finance except the valuer took an extra week because he had to get a flood certificate from the Council and obtain other info from them re the risks. We borrowed 100% but we have equity in another property it’s financed against to bring it down to 80%. We also did a LOT of due diligence before buying it, including long conversations with the Council and spoke to people in the street to ask about drainage generally.
Only one obstacle so far – we can’t insure the properties against flooding. But the insurance covers everything else and bank is happy with this.
Howc much of a risk is it that flood is not insured? Is it more a potential problem if a flood causes structural damage?
thomas
You must be logged in to reply to this topic. If you don't have an account, you can register here.
