- SandtrackersParticipant@sandtrackersJoin Date: 2009Post Count: 32
I am reading a lot about instalment contracts, and have a property that I am considering selling this way to go from -ve to +ve.
my question however, is, if I then buy a property, taking control of a sellers mortgage because they need out, I assume the loan/mortgage remains in their names, and hence this then would prevent them from getting into a new home/mortgage. Is this correct, and is this how it works?
thanksTerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
Unless the buyer is handing over the payment price at settlement the seller will not have the cash needed to buy the new one (unless from other sources). Same with you selling on installment contract.Mark CoburnParticipant@mark-coburnJoin Date: 2006Post Count: 181
The mortgage will remain a liability to seller for the life of the installment contract and therefore effect the seller's ability to borrow accordingly.
So I have the opportunity to supply approximately 50 houses to first home buyers if I leave the part of the "deposit" in on a 80% lend from a bank. Am i better with an installment contract where they pay the deposit balance over time or register a second mortgage and just get a weekly payment from them until both the money owed and increased value has improved?TaylorChangParticipant@scha9799Join Date: 2009Post Count: 234diisco44 wrote:So I have the opportunity to supply approximately 50 houses to first home buyers if I leave the part of the "deposit" in on a 80% lend from a bank. Am i better with an installment contract where they pay the deposit balance over time or register a second mortgage and just get a weekly payment from them until both the money owed and increased value has improved?
It's all about work together with the first home buyer.
If you help them build up deposit over time when the value increase, it will be easier to get them into traditional bank loan.
If you push them too hard to fast, if they default, then you will have a "mess" to clean up.
there is no hard and fast rule for while one is better, it's about how to work with the buyer to get what both want.
Please take very close notice of Terry's warning regarding the the unlicensed foreign finance 'firm'.
Also, a number of people here have been alluding to Deposit Finance, i.e. the buyer gets an 80% or 90% LVR loan and the seller provides a second mortgage for the remainder. In this scenario it's important to remember that the lender under the second mortgage (usually the seller) will be providing credit. Not only, providing credit but more than likely providing credit 'in the course of a business'.
Providing credit, 'in the course of a business' means the second mortgage lender will require an Australian Credit Licence (ACL) with the specific authority to 'engage in credit activities as a credit provider'. Not something to be ignored as penalties for acting without an ACL very significant.
Cheers, PaulChrisA1Participant@chrisa1Join Date: 2011Post Count: 172
I am wondering if disco is related to Dr Benson and pushing more information to further the cause??
Persistence is 'to keep on keeping on, no matter how hard the going may be'
Hi Paul.. thank you for that information… very good point… how would you secure your "equity" if not through a second mortgage or perhaps caveat? do you set it up as a terms contract of x amount of weekly payments…??????
The hurdle you're facing revolves around the number of transactions you be undertaking, i.e. around 50. Obviously, these transactions will be undertaken with consumers and 'in the course of a business' (ASIC's wording).
As both 2nd Mortgages and Instalment Contracts are credit contracts, in both cases you would be providing credit and would need ACL coverage from a licence that has the authority to 'engage in credit activities as a credit provider.'
Is there someway you can get an ACL? Give me a call if you'd like to talk about getting ACL coverage for these transactions.
cheers Paul, yes I will on tuesday if that is ok… i have been looking at it recently as the area I am based in has no brokers at all and plenty looking for one….
@paul…. re 50 properties……. That is the guide…. I have done some basic, simple social media advertising and have had 160 enquiries… all first home owners, in NSW, all currently employed… the 50 is what I thought would be a good conversion of this number… it may well end up much more…. We really havent advertised it that well so far… house and land packages starting at $220k (average $240k, all 3 bed 2 bathroom dwellings)… less the deposit for first home owners grant in NSW $15k and no stamp duty… small deposit taken. vendor finance some deposit to get the deals done….
Getting Australian Credit Licence coverage for these transactions will just be one of the hurdles you face for this project, but it shouldn't be too difficult to jump.
Cheers, PauljayhinrichsParticipant@jayhinrichsJoin Date: 2011Post Count: 1,177
here in is the language barrier between the states an OZ I have no clue as to what this post says… And I have 35 years in the bizz.. I can only imagine how OZ investors get confused with US coloquial terminaligy