100% Finance

[WebBoard]

From: Mike .


Andrew G
From: Sanchez
Date: 4/12/00
Time: 11:41:50 AM

Andrew

You have said in previous postings that you like to get into a purchase with little or no money down. How about stamp duty - are you able to do this because you borrow say 110%, having valued the property above the contract price? If so don't the lenders insist on lending based on the contract price?

I would be very interested to hear your approach.

Regards, Sanchez

 

[WebBoard]

Andrew S

Reply: 1
From: Mike .


Re: Andrew G
From: Andrew S
Date: 4/12/00
Time: 1:11:34 PM

Well I'm not Andrew G but I thought I'd throw my 2 cents worth in here. Most lenders will allow you to go over the purchase price eg 110% BUT they will require additional security, eg the equity in an existing property. I recently obtained a loan from Colonial State (for our first IP) in just this way.

The loan application specified purchase price and all costs, ie stamp duty, registration, conveyancing, application fees, deposit bond and valuations. The bank is more than happy with two properties as security. The only thing I have been out of pocket for is the Rent Risk Insurance (approx $200) and I could have included that as well if I had factored it in the numbers at the time.

PS I think the forum is great. I am an avid reader of the articles, if not a regular contributor.

 

[WebBoard]

Andrew G

Reply: 1.1
From: Mike .


Re: Andrew G
From: Andrew G
Date: 4/12/00
Time: 2:24:54 PM

Andrew,

Personally I would never want the banks to have their teeth into both of my properties. Those guys will grab all the security they can get their hands on. I think each property should be a seperate entity, just in case. (Did you know that Sydney is the second most litigious city in the world?) Another insurance policy if you will.

Andrew.

PS Don't get me wrong I'm really glad you are into a property. How is it going?

Sanchez,

It really depends on your lender. Banks are very conservative and will only go on contract price. Where you shop for your money is really important.

Andrew.

 

[WebBoard]

Andrew S

Reply: 1.1.1
From: Mike .


Re: Andrew G
From: Andrew S
Date: 4/13/00
Time: 8:26:26 AM

Andrew,

I don't really want the bank to have my home as security, and ideally I plan to have it released as soon as possible. But as we fully own(ed) it, that amounts to about $200K of equity just sitting there waiting to be used. We are at about 55% LVR now with one IP so there is still room for expansion.

We only just settled on our first IP about a week ago, so I'm still relatively new to this, but more than willing to learn as much as I can.

Andrew S

 

[WebBoard]

Sanchez

Reply: 1.1.1.1
From: Mike .


Re: Andrew G
From: Sanchez
Date: 4/12/00
Time: 5:04:19 PM

Andrew

Have you had any experience with lenders financing based on the valuation rather than the contract price? If so, were they willing to do so immediately (as opposed to six months down the track on a property secured with a bank guarantee etc), or did you need to argue that the market (during this period) had created the additional equity rather than your purchasing skill?

I would be interested to know if you have any alternative strategies for purchasing with no money down.

Regards, Sanchez