All Topics / Finance / Accessing equity after buying BMV

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of Rick staRick sta
    Participant
    @rick-sta
    Join Date: 2011
    Post Count: 120

    After much persistence I have just purchased a +CF IP in my home town of Townsville. I have managed to secure the property for about 20% below market value as it is in a low socio economic area and deters potential buyers, this coupled with a motivated vendor made for a great deal.
    Just wondering how soon after purchase can I obtain a valuation and use the equity to buy again, and what is the best way to go about this?

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Rick

    Congrats on the purchase.

    Some banks wont allow an internal refi for a number of months while some might look at it straight away. It depends on the lenders policy.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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

    And you might find that a valuer may think what you paid is market value. Start collection details of comparable sales (sales not just listings)

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of WhatIfWeFinanceWhatIfWeFinance
    Member
    @whatifwefinance
    Join Date: 2009
    Post Count: 58

    As Terry pointed out you need to be careful and do you your homework with comparable sales etc because the valuer may value at market price.

    Also different lenders have different policies. My view (leaving lender policy aside) is to revalue once you believe house prices have increased based on facts and evidence you have collected,

    Profile photo of John MaxwellJohn Maxwell
    Participant
    @john-maxwell
    Join Date: 2010
    Post Count: 30

    Rick,

    Depending on the lender, the Mortgage insurance is usually paid in large blocks of settlements. This means your loan is often not officially registered for sometimes 2-3 months. This will prevent you from changing the loan and upgrading to access equity.

    With our members, we do things a little different for this very reason. We also source lots of deals between 15% – 25% BMV on a regular basis, but through our complex option agreements, we specifically nominate the bank valuation as the purchase price, then through an appropriate agreement, release the equity to the client from day one.

    What this does is it prevents any lending issues, it also prevents the BMV price lowering the market (at least until there are comparable that have settled). With the right process, you can also use the equity to pay for costs such as the deposit, settlement costs … Leaving any remaining funds to go into the loan as a buffer. This preserves your cashflow for other purposes.

    Profile photo of YossarianYossarian
    Member
    @yossarian
    Join Date: 2006
    Post Count: 136

    Your first paragraph is wrong.

    Your second and third paragraphs appear to suggest the amount represented in the contract for sale is not the genuine amount of the sale. Can you explain how this is not an obvious attempt to misrepresent the transaction to the lender.

    Profile photo of waydo77waydo77
    Participant
    @waydo77
    Join Date: 2011
    Post Count: 155

    Hey John
    How do u give the bank a different price to what you are actually paying? Are u talking about a rebate option in the contract that the lender is not aware of or?
    So u sign a contract for say 500k but an option in the contract states that 50k must be refunded immediately after settlement or will be void after settlement or something? Don’t get it

    Profile photo of John MaxwellJohn Maxwell
    Participant
    @john-maxwell
    Join Date: 2010
    Post Count: 30

    I’m not going to argue with you Yosarian… You might want to look into it further, I was a Mortgage Broker for 11 years, mostly dealing with Non- Bank Lenders but my first paragraph is correct.

    In my second and third paragraphs U am referring to Option agreements. The Option agreement allows us to nominate the buyer and the price. The valuation is the price nominated. There is definitely nothing hidden or any misrepresentation. What we do is something Developers and Property Agents have done for many many years.

    Waydo, we are not purchasing the property… The client is. We secure the deal under Option and release the equity to the client under a Capital Option. Win win win all round – the developer gets to sell 10 – 20 properties and save their ass from bankruptcy court, the client receives 20% equity upfront (or more) and we receive a modist fee for our services.

    Profile photo of YossarianYossarian
    Member
    @yossarian
    Join Date: 2006
    Post Count: 136
    John Maxwell wrote:
    I’m not going to argue with you Yosarian… You might want to look into it further, I was a Mortgage Broker for 11 years, mostly dealing with Non- Bank Lenders but my first paragraph is correct.

    In my second and third paragraphs U am referring to Option agreements. The Option agreement allows us to nominate the buyer and the price. The valuation is the price nominated. There is definitely nothing hidden or any misrepresentation. What we do is something Developers and Property Agents have done for many many years.

    Waydo, we are not purchasing the property… The client is. We secure the deal under Option and release the equity to the client under a Capital Option. Win win win all round – the developer gets to sell 10 – 20 properties and save their ass from bankruptcy court, the client receives 20% equity upfront (or more) and we receive a modist fee for our services.

    I run a lending business so arguing with me on this one would indeed be pointless. You are wrong.

    Does the copy of the contract for sale provided to the lender and the valuer reflect the net price being paid by the purchaser? This should be a simple yes/no answer but I suspect you may struggle…….

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