- motivatedMember@motivatedJoin Date: 2003Post Count: 26
Hi all, I haven’t been on this forum for years, we haven’t invested in property for about 3 years and wow everything has changed so much.
We recently just sold our home and are wanting to buy a block of land that will have a mortgage that will be 3 times smaller than the previous loan, so payments will be a walk in the park.
We have our own business and have done for the past 10 years. Obviously with all business’ the wage we take in our names is a lot smaller than turnover. Turnover approx $350,000 wages approx $130,000.
We thought it would be a piece of cake to get an 80% loan, whether it be low doc or full doc. We decided to go low doc so that down the track when we build it may be easier.
We also have investment properties but they have a good rental return.
We had a broker send off an application for us and they came back the next day saying our loan was declined by the mortgage insurer due to the fact that we have had 10 applications declined in the last couple of years. This is absolutely not true, all we have done is tried to re-finance the property that we just sold last year and we couldn’t do it because the valulation came back $300,000 under what it needed to be. Mind you, we did just sell it for what we wanted it valued for. Some valuers are hopeless.
So, I realise that I can go and look at my credit rating and dispute it, but at the moment we don’t have time. We have only 10 left to get finance before we lose the block of land.
Hoping someone can help us out, obviously you would need more thorough details which I can provide.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
Sorry to hear the hassles you are having.
To be perfectly honest it doesnt sound to me like your Mortgage Broker has done you any favours for a couple of reasons:
1) You say you could have gone either Full Doc or Lodoc. Your MB should have explained to you that a lodoc loan over 60% lvr normally attracts LMI which is not the case with a full doc loan.
2) I am unsure as to which lender you MB has placed the deal with but i am assuming that they will still do lodoc construction as many lenders wont.
3) Your MB should have argued the case and have got it through.
Whilst it is difficult to comment fully without seeing all of the figures with the right lender i think the time frame is still achiveable and would despite the what your Broker suggested go full doc as long your income can support both the land and ongoing construction costs.motivatedMember@motivatedJoin Date: 2003Post Count: 26
Thanks for your reply Richard. I see you are in Brisbane, we are not too far away. We have just put one of our investment properties on the market so that will help pay for the building anyway, and we don’t intend to build for 6 months.
Can I email you full details and you can let me know what you think?Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024secretgnomeMember@secretgnomeJoin Date: 2003Post Count: 33
Few quick points:
– Going low doc doesn't make it easier to build down the track. Just go through a bank and get a standard loan to purchase the land. You'll get 80% lend on this easy without LMI. Down the track if your bank/broker is worth their salt, you'll just get another loan for the construction costs. Going low doc will just mean higher interest payments and more capital input at the start, but less work for your broker …
– It doesn't sound like you're struggling with your business so I doubt you'll have issues getting the loan. Most bankers understand that the income used to assess servicing is your wages + net profit in the business. If your broker/banker doesn't, i'd suggest talking to a business banker or a broker who deals with businesses.
– Usually as long as you can explain what the credit enquiries are for (yours sounds like a reasonable explanation), the bank will be ok with it. Sounds like your broker isn't doing what you pay him to do …
– On a side note, how would you have 10 enquiries on your record for one refinance? If the valuation came in $300k lower then no-one would do the refinance, so why apply another 9 times?