Bridging loan VS Low doc home loan advice please?

[gobear]

I dunno whether this is a good news or bad news. Today, its very likely a deal that I am going to make will be successful for a $800K deal property but the contract has NOT been exchanged yet nor 0.25% deposit has not been put down yet.

Now there is another problem for home loan.

This is the quick breakdown

- I have 3 properties
- I am retired (so no income apart from receiving rent from other properties)
- I have no business, so therefore, no ABN
- I can sell my current property first and then basically I can purchase the 800K without any problems but the problem is that I don't have enough cash. I am ok to put down 400K while the rest of 400K, I need to borrow from bank loan

I want to know which loan will be better for me

Bridging loan?

or Low doc loan?

Or maybe any other suitable type of home loan?

What are the requiremnt that I MUST show or provide if this or any other home loan is applicable to me and is almost certain enough to have my loan accepted? e.g. bank statement? income of proof? the properties that I own?

I intend to repay back within 1/2 year or 1 year at the most (so I assume that bridging loan is the most suitable for me while at the same time, I don't need to handle or show many documents, so that's why I though low doc home loan might be for me depending on what criteria fits me)

I went to a few banks a while ago to ask a few questions and I think from what I hear, it looks like it's harder to borrow, because even I put down my other 3 properties to them, they still need to consider whether I am eligible for it (which scratches my head becasue the other 3 properties that I own, the valuation is definately more than the amount that I am going to purchase)???? i.e. roughly $3 million (with no loan amount owing) so compare to $400K that I need to borrow, it should be no problem???

So will they be any difficulties in me getting accepted for the grant loan? I mean they asked me whether I have ABN, I said no. They also asked me whether I work and I said no since I am already retired.

Also, they stated that if I am going to purchase a 800K property and I am going to pay 400K as a deposit or whatever, I MUST show them the bank statement that I have 400K CASH IN HAND before they grant me the loan. Here is another problem because I need to gather the bits and pieces of amount in a certain period of time mainly from banks and a few income of stocks from overseas which will take a bit of time. So how am I going to convince that if they need to look at it straight away since it is pretty urgent?

I just hope that I can borrow 400K without having to show them the bank statement that I have 400K before purchasing it nor showing I have ABN nor I have income etc (apart from rent) as it will delay the purchase deal

However, 1 thing for sure is that I will almost definately have no problem repaying it within 1/2 year becasue once I sell my current property, it will be enough to repay my new home purchase. I just want to take it slowly rather than buying\selling at the same time as there is a risk of my property not getting sold on time during the settlement date of my purchase if proceeded BOTH buying and selling at the same time. So if the settlement date is 5 weeks, that means, I MUST be able to sell my house within 5 weeks or otherwise I will NOT be able to pay the settlement amount on time and the thing is I don't want to rush over it nor sell them cheaply in case time is very tight.

I was supposed to put 0.25% today but I decided to hang on and told them to wait till my bank loan is approved. But at the same time, I may risk of the property being taken in any time

Any advice will be greatly appreciated please?

Thanks

 

[Qlds007]

I think from the information you have provided you would not qualify for either a bridging loan or a lodoc loan and therefore maybe limited to a short term caveat loan or similar.

Most of these lenders want to see an exit strategy either by sale or refinance so as long as you can demonstrate this then it would be possible.

In saying this rate of interest would not be cheap but i guess at least it is doable.

 

[gobear]

I think from the information you have provided you would not qualify for either a bridging loan or a lodoc loan and therefore maybe limited to a short term caveat loan or similar.

Most of these lenders want to see an exit strategy either by sale or refinance so as long as you can demonstrate this then it would be possible.

In saying this rate of interest would not be cheap but i guess at least it is doable.

Thanks for the answer

Yeah I am prepared to pay a little interest higher than normal which is not a problem

I will have a look at caveat loan and it seems like that it is easy to get it approved? Unless I am wrong? What sorts of documents that is required to be approved pretty instantly or at least a few days?

I mean personally, it would be idea if the ONLY required proof is to show I have a couple of properties to refinance (I believe one is already enough) and no need to show others like proof of income, the bank statement and all the hassles since I need to get it approved ASAP

Or what other short term loan product would you guys recommended for loans between 200K-400K (because partially, my wife may able to cough up some out depending on what amount but it's definately around that range)

 

[RumpledElf]

More information on these caveat loans?

We'll be in similar circumstances soon but with much smaller figures - will have two properties but might want to purchase a third (if something good comes up) and like the OP, will be able to cover the bridging loan easily by the sale of the property we live in but won't qualify for a standard 25 odd year loan for that amount.

Just nice to know there are other options, otherwise we'll have to go with very long settlement periods and do something subject to sale, which can be rather awkward.

 

[Kristine..]

Hi gobear

What Qlds is talking about (and I am not trying to put words into his mouth) is an asset lender such as Ausec which don't charge any establishment or exit fees but do charge 1.5% per month for the time the loan is active.

For a loan of $400,000, that's $6,000 per month - by 6 months, $36,000 in interest.

Are you prepared to pay that sort of money?

However, Ausec can advance funds with almost 24 hours notice, although your situation does not require that sort of response time.

Believe me, as H L Mencken said, for every complex problem, there is a solution that is simple, neat, and wrong

I don't see that you have too much of a problem but the solution must be planned for, and not rushed into.

You have three wholly owned properties and plenty of rent income. You have available funds of $400,000 although these funds are not liquidated at time of making the sale.

You have plenty of options to finance this deal but you will need to take a measured approach to the situation.

And for Heaven's sake, do not sign this contract of sale without at least a finance clause, better still, don't sign anything until you have determined how you are going to pay for the property.

Cheers
Kristine

 

[Peter_Tersteeg]

From your other post HERE I gather you have an LVR of around 50%.

With this kind of LVR you can get a lo doc loan without an ABN. Assuming you're intending to rent the property the income from the property would cover the expenses so affordability shouldn't be a problem. If not you could borrow a bit extra to save some of your cash to cover the interest until you sell your existing property - although this can be risky if you can't sell your other property.

This would be significantly cheaper than a bridging loan or caviet loan.

The problem you may face at this point is that you've mentioned you've already approached several lenders. As you've fully disclosed your situation to them, you may have inadvertantly elminated them from your options.

With a 50% LVR there are plenty of lenders who would be able to help you, but you do need to present your information to them carefully. Once you tell them you don't have an income because you're retired, it's kind of hard to go back on that. It helps if you understand their policies upfront or if you go through a broker who understands this.

Call one of the brokers on this forum. There probably is a straight forward solution to your problem, but a lot more detail would be required.

 

[super_sam]

AusSec pulled out of the caveat/2nd mortgage market mid last year. They now only do 1st mortgages

I work for a caveat lender and really anyone who is still in this business will perform the same due dilligence as a traditional lender, we just do it quicker. The days of taking a resi property to 80% LVR with just a valuation and mortgage statements are long gone. Rates can be anywhere from 3% to 10% pcm depending on where you go

 

[Spectre]

If you're borrowing <80% and looking to sell your PPR inside a year you can do a short term (12 months) bridge under 5% p.a. It doesnt need to be a low doc.

As long as you can clear the debt with the sale of your principal place of residence at the end so there is no debt outstanding.

Bear in mind you need funds/income aside to cover the monthly interest and if you go past the allocated time the bank will sell it for you.