All Topics / Help Needed! / Valuation done on my new investment property is higher than my purchase price?

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of JonJon
    Participant
    @johnny99
    Join Date: 2005
    Post Count: 36

    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

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

    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
    Email Me | Phone Me

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

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    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 | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of JonJon
    Participant
    @johnny99
    Join Date: 2005
    Post Count: 36

    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

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    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
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

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

    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
    Email Me | Phone Me

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

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    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

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of JonJon
    Participant
    @johnny99
    Join Date: 2005
    Post Count: 36

    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

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

    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
    Email Me | Phone Me

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

    Profile photo of JpcashflowJpcashflow
    Participant
    @jpcashflow
    Join Date: 2007
    Post Count: 575

    Rates are not everything!!!

    Especially with a tight dead line in place

    Jpcashflow | JP Financial Group
    http://www.jpfinancialgroup.com.au
    Email Me | Phone Me

    Your first port of call in finance :)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    A low rate when you are in default on a contract will do little for you.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of JonJon
    Participant
    @johnny99
    Join Date: 2005
    Post Count: 36

    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

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

    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]

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

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