Hi everyone.
First post here (and a long one too!). I hope you don't mind me jumping in to tap into your expertise. This is the scenario that might just hit a finance hurdle.
My partner and I have made a written offer for a property in the Byron Shire hinterland - exchange will happen soon. The property has quite a lovely house in good condition that was built in the last few years without approvals. The owner apparently had more money than interest in dealing with 'petty bureaucracy'. Just to reassure you there are a series of due diligence expert checks now taking place to ensure it isn't a lemon nor a major expense to get the property to DA approval standard over the next few months. Byron Shire are happy to cooperate patiently they say.
My broker has started 'off the record' conversations with bankers. The buy price is 800k with a 10% deposit. Our combined salary is 150k with no debt. The broker's concern is that the unapproved dwelling will result in a 'no thanks' from either the MI or bank if they are alerted to it. The contract says land and dwelling but there are a range of 'no guarantee of compliance' disclaimers through the contract, concerning house, studio, pool etc. We go into this transaction very clear about the absence of current compliance and will use expert assessments to determine whether the discounts on asking price warrants an offer.
The broker's feedback today is that lenders will not just consider the land value on its own if there is a dwelling (even if it is unapproved). We cannot have the dwelling removed from the contract as the valuator will clearly bump into it. The broker is hoping that the disclaimer clauses in the contract don't raise a red flag. My understanding is that the MI part could be the biggest problem. I can probably get the LVR down to 85% with a bit of reordering. So....I have a few thoughts to raise with the broker tomorrow and wanted to see what anyone thought. It might be a combo of these approaches. Your thoughts very appreciated.
Option 1
Rather than specific exclusions of the vendor’s liability adopt a blanket exclusion something like “The vendor accepts no liability in relation to any claims arising from this contract”.
If we got the contract reworded the question would be should this change happen prior to lodging the mortgage application?
2. Option 2. Borrow money to get LVR down 80%. (a real squeeze)
3. Option 3. Family Guarantor
Option 4: Find a friendly banker
Option 5: Property risk insurance or Title insurance as part of the application to protect the bank's interests.
Any thoughts please?
First post here (and a long one too!). I hope you don't mind me jumping in to tap into your expertise. This is the scenario that might just hit a finance hurdle.
My partner and I have made a written offer for a property in the Byron Shire hinterland - exchange will happen soon. The property has quite a lovely house in good condition that was built in the last few years without approvals. The owner apparently had more money than interest in dealing with 'petty bureaucracy'. Just to reassure you there are a series of due diligence expert checks now taking place to ensure it isn't a lemon nor a major expense to get the property to DA approval standard over the next few months. Byron Shire are happy to cooperate patiently they say.
My broker has started 'off the record' conversations with bankers. The buy price is 800k with a 10% deposit. Our combined salary is 150k with no debt. The broker's concern is that the unapproved dwelling will result in a 'no thanks' from either the MI or bank if they are alerted to it. The contract says land and dwelling but there are a range of 'no guarantee of compliance' disclaimers through the contract, concerning house, studio, pool etc. We go into this transaction very clear about the absence of current compliance and will use expert assessments to determine whether the discounts on asking price warrants an offer.
The broker's feedback today is that lenders will not just consider the land value on its own if there is a dwelling (even if it is unapproved). We cannot have the dwelling removed from the contract as the valuator will clearly bump into it. The broker is hoping that the disclaimer clauses in the contract don't raise a red flag. My understanding is that the MI part could be the biggest problem. I can probably get the LVR down to 85% with a bit of reordering. So....I have a few thoughts to raise with the broker tomorrow and wanted to see what anyone thought. It might be a combo of these approaches. Your thoughts very appreciated.
Option 1
Rather than specific exclusions of the vendor’s liability adopt a blanket exclusion something like “The vendor accepts no liability in relation to any claims arising from this contract”.
If we got the contract reworded the question would be should this change happen prior to lodging the mortgage application?
2. Option 2. Borrow money to get LVR down 80%. (a real squeeze)
3. Option 3. Family Guarantor
Option 4: Find a friendly banker
Option 5: Property risk insurance or Title insurance as part of the application to protect the bank's interests.
Any thoughts please?