Deposit bond/bank guarantee

Hey guys,
I''ll go through my situation and what I'm planning to do.
Currently have 55k sitting in my bank account and looking at doing a bank guarantee for two pieces of land using my parents property which has 500k equity in it and/or using my deposit too..

I got a block of land at the Ponds that registers early next year.. I have to put 10% down within 14 days. For this loan, I'm gonna be doing an investment loan that uses the family pledge..

I'm also buying another block of land in another suburb which won't register for 12-18 months.. I will be using just a straight investment loan for this one. I was thinking of going halves with my parents on this one..Would there be any negatives to doing this?

In terms of servicing, my broker said I won't have any issues as we are doing both as investment loans and they will consider rent.

In terms of bank guarantee, deposit power said I need a full approval by the bank for the land before they give me a bank guarantee.. How long would it take to get an approval for land?

Is it possible to get a bank guarantee of my parents property for the one in The Ponds and for them to do a guarantee for my funds for the other piece of land?
 
In terms of bank guarantee, deposit power said I need a full approval by the bank for the land before they give me a bank guarantee.. How long would it take to get an approval for land?

Depends on the lender.

With deposit bonds - there's short term and long term bonds.

With short term bonds you need to show formal approval. With long term bonds - you need to show that you have a certain amount of equity available in other resi property.

Cheers

Jamie
 
Couple of things, you cant use rent for servicing vacant land, so re check your serviceability. If its your intention to build on these blocks then I suggest getting a builder to prepare a fixed price contract now, and having a loan approved for this now, rather than later.

You said you put down 10%, but you also need a bank guarantee? Usually you would provide one or the other, not both.
Bank guarantee's aren't issued by deposit power, deposit power issues deposit bonds.

Bank guarantees and deposit bonds are different beasts. As Jamie said, bonds can be issued where there is a formal approval and or equity in another property.
Guarantees are issued by a bank who holds the amount guaranteed in a term deposit (or sometimes as equity against a mortgage with that bank) for the period of the guarantee. The cost is usually paid monthly and is a little less than the interest paid on the term deposit. There is no requirement for an approval for the loan.

Check with the developer which they are after, many will only accept guarantees, rather than bonds.
 
Couple of things, you cant use rent for servicing vacant land, so re check your serviceability. If its your intention to build on these blocks then I suggest getting a builder to prepare a fixed price contract now, and having a loan approved for this now, rather than later.

You said you put down 10%, but you also need a bank guarantee? Usually you would provide one or the other, not both.
Bank guarantee's aren't issued by deposit power, deposit power issues deposit bonds.

Bank guarantees and deposit bonds are different beasts. As Jamie said, bonds can be issued where there is a formal approval and or equity in another property.
Guarantees are issued by a bank who holds the amount guaranteed in a term deposit (or sometimes as equity against a mortgage with that bank) for the period of the guarantee. The cost is usually paid monthly and is a little less than the interest paid on the term deposit. There is no requirement for an approval for the loan.

Check with the developer which they are after, many will only accept guarantees, rather than bonds.

Thanks Tobe.

I have the 10% but don't want to put it down as it's in my goalsaver account gaining me interest with commonwealth bank.. also wanna put it in my offset.. We'll be doing 100% loan for family pledge..

I would rather two bank guarantees, but if I do the second one on my parents house then will I have to pay the interest on it? i.e will they take out the 10% of their equity and we have to do repayments for it?

Both developers are happy to take bank guarantees

In terms of servicing the loans, the broker said I wont have issues when it comes to land settlement (12-18 months) due to the fact that we will be building on it and getting rental
 
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Correct, a bank guarantee costs money. The cost is offset somewhat by the interest in your term deposit, but it still costs money.
The cost is the same using your parents equity.
 
Correct, a bank guarantee costs money. The cost is offset somewhat by the interest in your term deposit, but it still costs money.
The cost is the same using your parents equity.

so am I just better off putting my actual money in?
 
There isn't a great deal of difference in the short term. Longer term might save you a little interest, but not a sheep station.

Getting a bank guarantee can be a little painful too in terms of running around.
 
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