finance

V

vicplanner

Hey guys I have a quick question…….

I own a house in Ballarat on a considerable amount of land. I have gained a permit to subdivide the land into two lots, one obviously with the house, and the other vacant.
I purchased the block for $270k and have a loan of $248 with Aussie Home Loans. Essentially the house is giving me grief and a buyer has offered me $210 for the house subject to
the subdivision going through. Now this is fine as it would leave me with vacant land in which I am currently preparing to develop. However Aussie Home Loans will not let me subdivide this
land as they do not hold land.

Basically I want to know how hard it will be for me to go to another bank and have them take a loan over the land to cover the amount I would owe after the sales? Also any suggestions on Banks?

I know I have probably not explained this well………..dealing with banks are not my forte!

Thanks in advance
 
vicplanner said:
Hey guys I have a quick question…….

I own a house in Ballarat on a considerable amount of land. I have gained a permit to subdivide the land into two lots, one obviously with the house, and the other vacant.
I purchased the block for $270k and have a loan of $248 with Aussie Home Loans. Essentially the house is giving me grief and a buyer has offered me $210 for the house subject to
the subdivision going through. Now this is fine as it would leave me with vacant land in which I am currently preparing to develop. However Aussie Home Loans will not let me subdivide this
land as they do not hold land.

Basically I want to know how hard it will be for me to go to another bank and have them take a loan over the land to cover the amount I would owe after the sales? Also any suggestions on Banks?

I know I have probably not explained this well………..dealing with banks are not my forte!

Thanks in advance
Click to expand...

go and see a broker , they will have heaps of options
 
Probably not too difficult to move to another lender, but there's two potential issues:

1. The LVR on your stated loan and property value is currently 91%. If you move to another lender you'll have to pay mortgage insurance again.

2. Many properties valuations aren't stacking up in refinances. There's a reasonable chance that the 91% LVR may become a 100% or higher LVR, which would elimiate you from refinancing.
 
PT_Bear said:
Probably not too difficult to move to another lender, but there's two potential issues:

1. The LVR on your stated loan and property value is currently 91%. If you move to another lender you'll have to pay mortgage insurance again.

2. Many properties valuations aren't stacking up in refinances. There's a reasonable chance that the 91% LVR may become a 100% or higher LVR, which would eliminate you from refinancing.
Click to expand...

But the property would be worth more once subdivided and he only needs to refinance the remaining land with the remaining debt.

So assuming the land is worth a modest $125k and the remaining debt ( $210k sale price less selling costs = $10 = $200k less loan $248k = $48k

So say $50k against $125k property LVR = 40% easy peasy
 
Bigtone said:
But the property would be worth more once subdivided and he only needs to refinance the remaining land with the remaining debt.

So assuming the land is worth a modest $125k and the remaining debt ( $210k sale price less selling costs = $10 = $200k less loan $248k = $48k

So say $50k against $125k property LVR = 40% easy peasy
Click to expand...

the issue is the existing lender might not accept vacant land as security, and therefore block the sale. cant refi before the sale because new lender wants LMI, and the title is already in limbo waiting to settle....

One alternative might be to organise short term unsecured finance for the remaining debt and then try and refinance it to a home loan after the sale.

Akward spot really, and you wont find many brokers falling over themselves for $46k loan (present company excluded) that will most likely need reworking, refinancing within 12 months.....Ballarat does have the highest per capita broker numbers in australia though.
 
tobe said:
the issue is the existing lender might not accept vacant land as security, and therefore block the sale. cant refi before the sale because new lender wants LMI, and the title is already in limbo waiting to settle....

One alternative might be to organize short term unsecured finance for the remaining debt and then try and refinance it to a home loan after the sale.

Akward spot really, and you wont find many brokers falling over themselves for $46k loan (present company excluded) that will most likely need reworking, refinancing within 12 months.....Ballarat does have the highest per capita broker numbers in australia though.
Click to expand...

yes it needs to refinance but i don't see it as an issue, sale can't go through until sub divsion is finalised, sale and refinace go through at same time, conveyancer brings two new titles to settlement, gives one to new purchaser and one to new lender.
 
maybe Im being overly cautious. i havent actually had to deal with this particular scenario.

But, where is the existing lender in the sale and refinance (either simultanous or a day later)?

Existing lender wont let the sale go through unless the full debt is cleared, the remaining portion of the full debt cant be cleared by refinance until receipt of the new title, which the existing lender wont allow.

I am no doubt overthinking this, perhaps someone who has actually had experience with a silimar scenario might comment.
 
It would just be a substitution of security from one block title to another title. As long as the value of the security is x% the lender should not have a problem with it.
 
Terry_w said:
It would just be a substitution of security from one block title to another title. As long as the value of the security is x% the lender should not have a problem with it.
Click to expand...

Many lenders have restrictions on vacant land as security, especially zoned regional or rural, and especially if its not just a normal house lot (which it looks like this one might be).

If Aussie were happy to hold the vacant lot as security, then as you say it would be quite a simple matter, but the OP has said Aussie have issues with holding the land.....
 
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