Forums / Property Investing / Help Needed! / Bank Lending Flexibility – As If Complete vs In One Line Valuations

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  • Profile photo of TonyGTonyG
    Participant
    @tonyg79
    Join Date: 2015
    Post Count: 10

    Hi Team, I am building a small multi unit complex which I will strata upon completion. The loan will be residential vs commercial. The bank ordered a valuation for as if complete and in one line. I understand an in one line valuation can be between a 15-30% discount on the as if complete. I think I could get over the line on an as if complete basis but not in one line. Are banks flexible in their lending policies in regards to what valuation number they use if you have a strong application otherwise on a residential basis?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Short answer is ‘no’.

    LVR will be based on the figure the valuer gives.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of TonyGTonyG
    Participant
    @tonyg79
    Join Date: 2015
    Post Count: 10

    Thx Terry. Yes the LVR is 80% so will lend 80% of the valuation result. Say the As If Complete result = $2.5mm & the In One Line = $2mm (20% discount). I can get over the line on the 0.8×2.5mm val but probably not the 0.8x2mm val so do you think banks would weigh it up and confirm unconditional approval or is it a hard rule that in one line val must be used for construction of multi units on one title even though you will strata?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Unless you are offering additional security the loan will be based off 80% of the $2M.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    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 TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Selling 3 on one title is much better than selling 3 on separate titles, hence the discount.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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

    Thx Terry. Yes the LVR is 80% so will lend 80% of the valuation result. Say the As If Complete result = $2.5mm & the In One Line = $2mm (20% discount). I can get over the line on the 0.8×2.5mm val but probably not the 0.8x2mm val so do you think banks would weigh it up and confirm unconditional approval or is it a hard rule that in one line val must be used for construction of multi units on one title even though you will strata?

    If they used proposed end values post strata (GRV) – they would generally only lend 65% of the amount in commercial so you’d be worse off than this being financed resi @ 80% of the lower val.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    Some resi lenders use “in line” and some use “end values” so the key is selecting the right lender to minimise the cash injection required. Small lot savvy brokers will know who is who in the zoo.

    Less are going the “end value” route and more the “in line” method in my experience of late as the later presents less risk to the lender.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
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    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

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