All Topics / Finance / 2nd Mortgage registration / Vendor Finance

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  • Profile photo of jsawtelljsawtell
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    @jsawtell
    Join Date: 2007
    Post Count: 57

    Hi,

    I have a 5% Vendor finance agreement on buying a block of land (which would be our our 2nd property).
    It was agreed that the 5% finance would be secured against first (other) property.

    The vendor wants to register a 2nd mortgage and are asking if the first mortgagee on the property has granted consent for a second mortgage.

    Does this sound correct?  Does the First Mortgagee need to provide approval/consent?

    Or is there another way?

    Anyone know where I may be able to get $15k-$20k without securing against property on 6 month agreement while we sell our first property.

    Thanks in advance
    Jason

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Jason

    It all depends on the State and the regulation within that State.
     
    For example in Qld up until recently you need 1st mortgagee consent to register a 2nd mortgage but those days have now gone and no consent is required.

    No other way as 2nd mortgagee is going to want some security.

    I assume you cant borrow it from your current lender ?

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    Profile photo of jsawtelljsawtell
    Participant
    @jsawtell
    Join Date: 2007
    Post Count: 57

    Thanks Richard.

    I am in QLD, so that sounds good.  I will follow up with my solicitor.  Is that information detailed somewhere?  Just in case they are not aware of it and I can reference it?

    Banks – numbers were tight.  Any extra coming out of first property was attracting high LMI fees.

    Qlds007 wrote:
    Hi Jason

    It all depends on the State and the regulation within that State.
     
    For example in Qld up until recently you need 1st mortgagee consent to register a 2nd mortgage but those days have now gone and no consent is required.

    No other way as 2nd mortgagee is going to want some security.

    I assume you cant borrow it from your current lender ?

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    The lender probably won't lend if they know about you doing vendor finance – especially at 95%.

    Have you considered using the equity in the existing property or maybe even a personal loan>?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    My point exactly Terry.

    Dont know a lender who will knowingly accept a 5% VF deposit these days.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of jsawtelljsawtell
    Participant
    @jsawtell
    Join Date: 2007
    Post Count: 57

    Thanks guys.  PS, information I provided was limited so I can see your assumption.  But it is not a 95% lend. 

    Richard,
    Is there official information readily available stating that there is no longer a requirement for consent that you could point me in the direction of?

    Thanks
    Jason

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    No just ask your Solicitor he will tell you that consent is not required unless of course the 2nd mortgagee is insisting on it.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of keikokeiko
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    @keiko
    Join Date: 2008
    Post Count: 513
    Qlds007 wrote:
    Hi Jason

    It all depends on the State and the regulation within that State.
     
    For example in Qld up until recently you need 1st mortgagee consent to register a 2nd mortgage but those days have now gone and no consent is required.

    No other way as 2nd mortgagee is going to want some security.

    I assume you cant borrow it from your current lender ?

    Hi Richard, Are you sure this is correct? that you don't need first mortgagee consent
    I was looking at a similar thing not that long ago, and my lawyer said to me, I would need consent from the first mortgagee if I wanted a second mortgage lodged, unless it did not state it in the contract

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Yes have done 3 or 4 of them in the last couple of months alone.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of keikokeiko
    Participant
    @keiko
    Join Date: 2008
    Post Count: 513
    Qlds007 wrote:
    Yes have done 3 or 4 of them in the last couple of months alone.

    Cool thanks.
     when the second mortgage is lodged will the first mortgagee find out about this?

    My lawyer seemed to think that most banks have it in there contract where it says you must notify them before doing the second mortgage?  my lawyer said if i dont make them aware of this then they may ask to be paid back as i broke the contract conditions?

    I noticed in your above message you say up until recently the rules were changed?

    Profile photo of jsawtelljsawtell
    Participant
    @jsawtell
    Join Date: 2007
    Post Count: 57

    Hi kelko

    I had no issue and not aware bank was notified of 2nd mortgage on first property as per my original post. Mine was a short term solution while we sold the first property, which we have now done and the 2nd mortgage (and first mortgage) is now cleared as equity from first property was released in sale.

    Regards
    Jason

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