All Topics / Help Needed! / Assets but no servicability, how to get a loan?

Viewing 20 posts - 1 through 20 (of 35 total)
  • Profile photo of Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9

    I never had much to do with lending; had a home loan, now paid off… but left siting there in case I need some cash.

    Decided to buy a block of land $130k and owner-build on it ($170k), then selling the house (appraised in the mid 600s), nest-egging 300k.

    I have 100k in the redraw facility, which I use to pay for the land.

    I rang the bank to up the loan by another 100k so I could start the build; the response was "no", because I am currently not employed.

    Being an exGerman, this sort of deal is a no-brainer in Germany; rest assured I was surprised this is not so in AU.

    The only option I see ATM is to buy some sort of temp accommodation, sell the home, and then have the cash I need.

    What avenues do exist to get my hands on a say 100k loan to build? … sort of an interim finance.

    Any hints appreciated.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Some lenders allow for rental income only depending on a few conditions. What's the value of your PPOR?

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9
    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Max

    Firstly welcome to the forum and hope you enjoy your time with us.

    Sorry i might have misread your post but from what i can see from the numbers i believe it is certainly doable.

    There are many ways to do a deal even if your existing Bank so no.

    Course as i say i may have totally misunderstood your post but i dont think so.

    Cheers

    Yours in Finance.

    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 TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Ok so LVR is ok – you should have an issue with this. Find a good broker and he/she will sort it out within hours.

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

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

    Hi Max

    Welcome aboard.

    An ex-German – lol, my wife is one of those as well.

    Give Richard a buzz – he's an ex pom, he'll sort it out for you :-)

    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 Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9

    Thank you all for the warm welcome… feel home already :)

    I probably need to be more precise / explicit:

    I live in a home worth 600k+

    The loan is paid off (much earlier than required, hence, I have got 100k to redraw)

    I will redraw the 100k to pay for the new land I bought; 30k come from savings.

    I need 100k to build a new house on the new land.

    Once the new house has been completed to move in, I sell the 600k home, and repay the 100k redrawn plus the 100k I needed as a loan to build.

    ______

    Now, there was a question on rental income. The rent could be $450+ per week (have now checked). But, if I have to move out to rent out the place, then I rather move into a temp accommodation to be plonked onto the land and sell the place now… which I see as the least risky and most cost effective way, if finance cannot be obtained.

    Hope this helps for further thinking… thanks.

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    Hi MM,

    This is a very simple deal, there are multiple ways it could be done but probably the easiest would be with capitalized interest. There are a lot of lenders that won't fund a deal like this, mostly because you are not planning on having an ongoing debt, so it would not be profitable for a standard residential lender to provide funding. if you are upfront regarding the method of debt clearance and relatively short time frame of the loan, there are plenty of lenders who cater for such situations.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    You can do this with mainstream several lenders under a relocation loan. The interest will be capitalised so the fact that you don't work is not an issue.

    If you are doing a vacant land and build then you will have 12 months to construct and sell the current property.

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9

    I kindly thank you for your input and feedback!

    The day looks brighter. You should have seen my chin drop when I got the "no". I was never expecting it.

    Well, lesson learnt! I will post what the outcome / way forward was.

    Profile photo of Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9

    As it currently stands (and I do not see this changing) no serviceability = no loan! Fulls stop. LVR means nothing, any rental ideas won't work either… two options remain:

    1. get a job and earn some dollars

    2. put the house on the market and sell it

    I will try 1. for a couple of months before cash flow becomes a problem, then 2. will happen.

    Again, thanks for all your feedback and replies! :)

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    If you have been told that you are simply not speaking to the right person, there are numerous options mentioned in posts above, i suggest you speak to somebody who knows what they are talking about, there are plenty of options right in front of you.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    You have 3 options Madmax:

    Option 1: Get your broker to call a bank that can do a relocation loan, e.g. St George and get him to structure the application in that way

    Option 2: You can call a bank that handles this type of transaction such as again St George

    Option 3: Find another broker

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9

    Hmm, did I say I want to owner-build? My plan is to do just that.

    … which kills the option of the relocation loan; citing the St. George Bank at http://www.stgeorge.com.au/personal/home-loans/our-home-loans/specialist/relocation-loan states: "Not available for uses including owner building, vacant land or extended settlement loan."

    I may have to find a builder to make this option work… but the point is: the relocation exists.

    Again, thanks for continuing to contribute!

    I will keep the forum posted.

    Profile photo of IPBIPB
    Member
    @ipb
    Join Date: 2013
    Post Count: 7

    Hi MM,

    Have you considered a JV with a builder? 

    You have the land. If you can come to an agreement about how the builder will be paid /profit share on the end of the build. That might work.

    Good luck

    Andrew 

    An Investment Property Builder

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

    Shahin old mate The Dragon doesn't do a Non Relocation loan where an owner builder is involved.

    Trust me Max is in Brisbane and we have been down that path.

    Cheers

    Yours in Finance

    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 Mad.MaxMad.Max
    Member
    @mad.max
    Join Date: 2013
    Post Count: 9

    Yes, thanks, this is one of the latest ideas :)

    Will be sorting this out next week.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Yes but since he doesn't have a vast range of options – doing a relocation loan via a building contract rather than an OB is one of the options worth considering.

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

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

    Yes agreed and that's what i suggested to him.

    Cheers

    Yours in Finance

    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 callmelescallmeles
    Participant
    @callmeles
    Join Date: 2007
    Post Count: 29

    Hi Madmax

    One other option not mentioned is to approach some well heeled friends and cut them in for a portion of the action or agree up front that they get an above bank return say 8-10% p.a. or a cut of the profits.

    This financing has worked a gem for me on the past five purchases.

    I have 6 institutional lenders who have all told me no no no over the past two years.

    But my friends who have looked at the deal scenarios I have offered (always worst case scenarios only) have lined up and funded all of my recent purchases.

    Good luck

    PS  Failing all else, contact Mel Gibson and pull on his nostalgic strings by telling him "Have I got a deal for you……."

    Regards

Viewing 20 posts - 1 through 20 (of 35 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.