I have been lurking for awhile, reading over all these very helpful threads
I now have a quick question regarding financing of off the plan purchasesI signed a contract and had finance approval and signed loan docs back in May 2009 for an apartment off the plan. apartment was finished in November but settlement has not occurred due to problems with the plan of subdivision. settlement is now expected to take place in September/October ie nearly 12 months after completion. I believe that the value of the apartment has increased since the contract date, perhaps by as much as $40-$50k given recent off the plan and established apartment sales in the same suburb. i have asked my lender to re-value as I have to re-apply for the loan anyway.
My question is, if the value has increased as I suspect, is it possible to borrow 80% even if 80% of the current value might be a little more than what is required to pay the balance of the contract price? Or would it be more likely that a lender will only advance what is required to complete settlement. I'm a first home buyer and eligible for the FHOG of $26k if that makes any difference to the outcome.
You used to be able to borrow based on the value if the contract was exchanged more than 12 months ago – with generally no more than the purchase price being available. I am not sure if this is still the case however.
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
My experience is that the lender will fund on the basis for the lesser of the 2; contract or val. That has been in policy for sometime, but havent come across any scemarios of that sort for a while so not clear where policy is today.
stephen@longwater wrote:My experience is that the lender will fund on the basis for the lesser of the 2; contract or val. That has been in policy for sometime, but havent come across any scemarios of that sort for a while so not clear where policy is today.Generally speaking this is true but if you have a good relationship with your bank and a good risk grade then they should will bend on policy a bit. I would say you should be fine with a major if you are within 80% and it is overall a good deal.
I’m seeing a lot of things like this where you can only get the rules bent if your a long term customer with multiple products:- not new to bank. I wouldn’t even try if you had transactional accounts etc held with a different lender.
Thanks for the replies everyone
I am happy to report that the valuation has come in at $40k more than the purchase price and the bank is lending 80% of that rather than the contract price. Loan amount works out to be roughly the same (initial loan application was for 90% of contract price) and now I don't have to pay LMI. Very happy with this turn of events.
Well done.
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
Good to hear these stories as it gives more people the courage to ask for what they want!
Definitely – just goes to show that sometimes settlement delays in off the plan purchases are a good thing. When I signed the contract nearly 16 months ago I was told I'd be moved in by Christmas 2009! No doubt I'm financially better off because of this delay and better off than most first home buyers.
For anyone interested, the lender is Bankwest and I had no prior accounts or borrowings with them prior to applying for this loan. They have been great to deal with.
Well done mate…. I love hearing a good story against the banks!!!!!!!!!!!!
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