Hi all
A good friend of mine asked me this question and i'm not sure so would like to seek some help here:
he is purchasing an apartment in CBD and the valuer valued the property the same price as the asking price($430K). but he put a comment on his valuation report saying that his opinion is that this particular apartment will depreciate in the next 2-3 years and he gave 4 stars out of 5(5 stars being the most risky).
So the question is: will the bank approve a 80% loan? will the valuer's comment negatively affect the bank's decision so that my friend can only borrow say 70% or even less? Which plays a more important role, the valuation price, or the comment?Any comment much appreciated
AOI've never heard of comments like these, but I think that the comment is a bit of a warning sign.
Your friend would do well to do some thorough research into the resale values of similar apartments in the immediate area ovedr the last 12 months, and check with a few local agents on the rental; demand, vacancy and rent return.
As far as I know, the Bank will always lend against the valuation.
Hi Marc
Thanks for your help.
It's a new building and there are not many comparables.
Let's see how much the bank is willing to lend…cheers
AOI've recently had a place (12month old brick house, good suburb) refinaced with the same 'Reduced value next 2-3, 4 stars out of 5' rating.
I was thinking about refinancing to 95% but decided only on 90%, bank approved the evaluation and paperwork should be complete next week or so.From my personal exprience I couldn't see a 80% loan being an issue at all.
Goodluck!
I have had a few of these and they got through ok.
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 AO,
Borrowing is only one side of the coin. Should your friend even consider buying if there is a high risk of property value falling in the next 2-3 years? I suggest your friend gets another independent valuation (and this time for market value rather than for lending because the valuation for lending is usually more conservative). I know this will cost bit more but its better to do your homework before buying. This may save your friend from buying a potential lemon. Also, as suggested by Marc, your friend should do more research on the local areas – maybe buy sales reports, etc.
Hope this helps.Thanks for all your comments.
My friend got the loan and the valuer’s comment turned out to be just a comment. Any that valuer looked dodgy to my friend and I. We don’t think he is very professional—he is originally from a 3rd-world South-Asia country and was dirty and he didn’t smell too good. We were shocked to know he was the valuer we were expecting when he introduced himself.anyway with the strong rental yield this property will be positively geared and my friend is not worrying too much about that comment.
Thanks again for all your input.
AO
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