Valuation done on my new investment property is higher than my purchase price?

Viewing 13 posts - 1 through 13 (of 13 total)

Jon
Participant
@johnny99
Join Date: 2005
Post Count: 36
June 5, 2014 - 5:00 am
Hi there,
I’m completing on IP three this month and the lender’s valuation came back at $155,000 which was my original accepted offer on the property.
I have since had a building inspection done and the builder found a few things wrong which I used to negotiate the new price down to $150,000. Does this mean if I am paying a 20% deposit I can pay 20% on the $150,000 purchase price and then get the extra $5000 back from the lender on settlement if I keep the loan based on a purchase of $155,000? Will most lenders let you do this? I could then use the $5000 on subsequent deposits etc. Hope this makes sense ! Thanks Jon
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
June 5, 2014 - 9:21 am
Hi Jon
The bank will go off whichever is lower – the purchase price or the valuation.
So in this instance, they’ll go off $150k.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 5, 2014 - 11:06 pm
Hi Jon
Purchase price or valuation whichever is the lower is the rule of thumb.
Just make sure you advise your lender now as otherwise you might get to settlement and the transfer document will show the lower and the Bank will not settle.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Jon
Participant
@johnny99
Join Date: 2005
Post Count: 36
June 9, 2014 - 2:06 pm
Thanks for the replies!
I advised my lender and they said officially they would need to restart the whole loan application process and the only way around this is to get the vendor to give me a cheque for $5000 on settlement. As settlement is in two weeks we are hoping to get the cheque from the seller but I guess it would be hard to ensure this happens. I am trying to get my solicitor to get them to sign something saying they will give me the cheque, but my solicitor has said “there is no guarantee they will accept”. Not sure why my solicitor is acting like its a big issue (the seller already agreed to the lower price), but waiting to hear the latest after the long weekend! Fingers crossed…
Cheers
Corey Batt
Participant
@cjaysa
Join Date: 2012
Post Count: 1,010
June 9, 2014 - 6:30 pm
Lower of the two values as per norm.
Which lender is this? If you have to go back to assessment, quite a few lenders will be able to run this through the processes relatively quickly, unless you’re with one of the snailbased banks. :)
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
June 9, 2014 - 8:12 pm
Jon wrote:
Thanks for the replies!
I advised my lender and they said officially they would need to restart the whole loan application process
Depending on the lender, this could be turned around in less than a day.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 9, 2014 - 8:16 pm
Had one from a forum member only last week where as a result of a soil test the land purchase price was reduced.
We had the lender re-approve the loan in an hour and had revised loan documents out the same day.
Certainly wouldn’t be leaving it until the last minute as you could be the one in default.
Cheers
Yours in Finance
- This reply was modified 9 years, 10 months ago by Richard Taylor.
Richard Taylor | Australia's leading private lender
Jon
Participant
@johnny99
Join Date: 2005
Post Count: 36
June 9, 2014 - 8:20 pm
The loan provider is http://www.loans.com.au. They said they would have to reorder the valuation which takes a few days to get. They move slow but had a 4.48% pa rate which is the best ever in Australia I believe which was the motivation to go with them. Will touch base with them tomorrow and ask if it would b achievable in the time left. Thanks
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
June 9, 2014 - 8:34 pm
Given the slow processing times you’ve eluded to – I’d avoid a rework at all costs!
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Jpcashflow
Participant
@jpcashflow
Join Date: 2007
Post Count: 575
June 9, 2014 - 8:42 pm
Rates are not everything!!!
Especially with a tight dead line in place
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
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Your first port of call in finance :)
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 9, 2014 - 9:39 pm
A low rate when you are in default on a contract will do little for you.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Jon
Participant
@johnny99
Join Date: 2005
Post Count: 36
July 2, 2014 - 7:03 am
Hi there, thanks again for the replies. The IP settled on time. In the end was arranged for the seller to give us back $5000 in the settlement adjustments so a reapplication may not always be necessary when you negotiate a lower price after signing contracts.
Cheers
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
July 2, 2014 - 1:04 pm
Hi Jon
Good result – well done :-)
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]