Hi.
I have been looking at 8 units to buy but when i went to get finance from the bank they said more then 3 units is seen as commercial and i will need 30 percent of the property. Is there anyways around getting the 30 percent deposit down.
Thanks
If they're already strata titled split them between 3 different lenders to keep them residential. NAB was doing up to 4 as residential a while ago so probably depends on their lending policy at the time……
There are still many lenders who will do upto 4 units presently and the odd who will do 6 all at residential rates.
Just depends on the overall strength of the deal.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Try spliting them into different Trusts. Go to several different banks, one for each Trust; each of them using you as a guarantor. As you do not (yet) have a liquidated debt, you can act as the guarantor.This will also allow you to borrow much more in the long run.
Richard (or anyone else) could you please clarify something re 'depending on the strength of the deal'…….
With the odd lender that may do 6 at residential rates: scenario – 6 units, brick and tile construction. for $750K, $53K PA income, what's the highest LVR you might expect? would this be considered a 'strong' deal?
Also, if they're already strata'd as opposed to in-one-line does that make a difference to the interest rate or LVR?
Thanks,
TraceyDepends on the lender and also the insurer as the others have said.
CBA considers 4 to be residential and 5 to be commercial. AAMI will not insure a block of more than 2. GIO will insure a block of 4.
I acquired a block of 4 using CBA residential, and GIO residential IP. You really have to hammer it in to GIO though that the units are all on one title or that you own all of them or whatever the case may be. They get very hung up on "oh but we cannot insure the common parts" which means the driveways, fences, etc etc… until you say "THEY ARE NOT STRATA TITLED. I CANNOT SELL JUST ONE. I WOULD HAVE TO SELL THE WHOLE KIT. ALL THE FENCES AND DRIVEWAYS AND COMMONPARTS ARE MINE." Then they understand and it's all good. Remember to insure not just the building but also the contents, driveways carports, fences etc. Remember that you must ask them "what are contents? and be sure to cover yourself for such items (i think it was stuff like window coverings and carpets). Also be sure the policy covers the cost of rebuild of the building in the event of fire etc, but also the re-laying of all the concrete, new fences and so forth. You would be mortified to learn how out of pocket you'd be for such things if you were not covered.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Tracey
Not enough soft data to make a structured answer but depending on the location of the property you might get 80% Lvr.
Certainly wouldnt be considered a strong deal although subject to A & L might get it over the line.
Yes it would make a difference if they are all strata titled subject to be able to split up the Contract into 2 parcels albeit simultanous settlements.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard would prefer not to put too much detail here – they're in a suburb of Launceston, population 100,000.
We have all but appointed a listing agent so I will make sure they're aware that we are willing to offer a split contract with simultaneous settlement for the purchaser if it helps with the finance.
As always your suggestions are much appreciated!
JacM – good point about the insurance – I'll keep that in mind.
Cheers,
TraceyIf they are strata-titled, you might find that by purchasing them all under separate contracts of sale you save on some stamp duty. Worth doing providing that the extra solicitors fees make it not worth the bother.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
ok, thank you.
How do you go about it if the units are not strata- titled? And whats the best way to go about setting up the trust?
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