Duplex finance hassles

[Finn.]

Anyone else run into lenders being unwilling to provide finance for a duplex on a single title?

I've had my offer accepted, subject to finance and building/pest inspections, for a duplex on a 1000 m2 block in a regional town. The purchase price is around 200k, I'm putting in 20% plus all purchasing costs from my savings, the rental gross yield is 7.8%, so it's cashflow positive after managing fees and insurance and maintenance etc at loan interest rates up to about 8%.

My broker seemed to think everything was great, but today called me to let me know that the lender had baulked at the dual occupancy on the single title thing. Investigating with the other lenders he's found that most of them will only do 65% lend on it. Makes no sense to me. He'd found one now that will probably do it, but at 0.2 higher interest than the original one I applied for, and only for 3 years interest only instead of the 5.

Anyway, rant over now, will have to give him a call in the morning to make sure everything is still sweet to go unconditional. Just hadn't heard of duplexes being so difficult before.

Finn

 

[Qlds007]

Yes many lenders have a cap on the number of dwellings they allow on a single title however in saying that you should certainly get more than 65% lvr.

Not sure who he is trying but sounds like he doesnt do much development style financing.

 

[Rolf Latham]

Hiya Finn

If LMI isnt required most lenders will do this sort of deal at 80 % without much sneeze. depends on whats regional and if we are talking full doc or lo doc AND if the duplex is "attached"

ta
rolf

 

[whynot?]

I have just logged on to do a search for a similar situation. We have seen a duplex half on a total 1200 sqm block that has not been separated on the title. It shows that the total areas surrounding the 2 duplex properties are common grounds. Does this mean we will have trouble getting finance?

We were going to write in our offer and acceptance that the offer is subject to the owners of the other duplex agreeing to having the site surveyed within 28 days of settlement to show the split down the middle.

 

[Rolf Latham]

Hiya Why Not

if its full doc to 80 % should be fine if metro. If you need say 90 % on full doc, may still be ok.

ta
rolf

 

[whynot?]

Thanks Rolf.. Phew, I was getting a bit worried then. We are metro so fingers crossed everything will work out.

 

[Bradsdad]

I'm wondering if your MB has put the deal together right or if it's Lo-Doc or if there's an issue with the valuation through the lendr he submitted it with.
Also, as mentioned, how "regional" is it?

 

[Finn.]

It's not too regional, the town is Kingaroy in QLD. It's a full doc loan, or should be. The duplex is attached, it's an older house which was converted into 2 units some years ago. Hmmm... the MB thinks it's all good now, but I guess I'll find out in the next few business days. Need finance to be approved by Friday next week, so it should be ok.

Thanks for the replies, I think this is the last time I'm using that MB.