back-to-front property buying questions

[Smouch]

Hello,

I am a bit backwards to most as I am currently building an investment property (value on completion 290k in Dec, rent to be approx $270pw, loan of 227k) and I am now looking at buying a house to live in.

I will have no deposit but could cover buying costs. Would anyone know if a second bank would even look at giving me a loan if our combined net income is about 75-80k? looking at properties at about 350k mark.

Would I have to refinance the original loan? I am thinking that I will have to.

Happy to be referred to other threads

Thanks

Smouch

 

[tobe]

Its worth having a chat with a broker I reckon. there are lenders who will do 100% loans, es[ecially for owner occupiers. You may even be able to use the same lender as is doing your construction loan. One issue may be the time frame. As the investment property is yet to be completed some assessors may not want to use the likely rental income. So you will need a lender that will use negative gearing in their serviciability, and hopefully not use their plug rate is assessing your existing investment loan, and be able to use the as yet only propsed rental income.

 

[Peter_Tersteeg]

The right answer here really depends on the figures. As Tobe mentioned, your existing lender might be able to do this which could help a lot. If not, the question to refinance will depend on the exact figures involved as well as the timing.

If your current lender can't help, a good mortgage broker should be able to lay out several options. This should include what you need to do and the costs involved if you don't refinance.

Keep in mind, many brokers will automatically suggest you refinance as this earns more commission for the broker, even if it's not in your interests. Refinancing can be costly and should only be done if it's clearly the most beneficial option. Increases of existing loans can often give you the same result, but lenders don't pay brokers as well for doing this.

 

[boods99]

Keep in mind, many brokers will automatically suggest you refinance as this earns more commission for the broker, even if it's not in your best interest

PT,
I was under the impression that if a broker's client refi's within a certain amout of time, then the lender is entitled to "clawback" the commission paid, the amount depending on the amount of time that has passed. Is this correct?

Boods

 

[Qlds007]

Hi Boods

You are correct.

With some lenders the clawback period can be upto 18 months.

 

[Spectre]

Leaving the commission issues aside for now...

If your debt is say 227+350 = 577k
Property Assets are = 640k
Rough overall lvr is under 95%

As is LVR 227/290 is under 80%.
Rough thoughts...

you could look at either cross securing the new property with the one being built to give you your equity (which most probably wont recommend you doing)

You could do a little loan on the IP property to cover 3-5% deposit on the new property

Question - who is the current lender as you'll probably have MI to pay on the 3-5% increase unless you can get them to value it higher to avoid it




Noting I havent worked the servicing out to see where it will float

 

[Rolf Latham]

clawbacks are a fact of life.....................

Some transactions are for a buy sell only, thats when some upfront fees need to be charged to help offset the costs of doing the loan.

ta
rolf

 

[tobe]

to the claw back issue, if the client does a loan with one broker, a new broker will have no disincentive to suggest they stay with the exisiting lender, as the claw back comes out of the old brokers trail.
Interestingly if the second broker tops up the old loan with the same lender most lenders will move the whole trail to the new broker, giving them a little compensation for doing the right thing by the customer, and discouraging churn.
I reckon the broker has to make a very good case to change lenders and a timeframe on when the interest rate or flexibility savings will break even with the break costs to the client...