Financing termite riddled hell hole

[laurieload]

I am genuinely considering purchasing a termite infested house offered for 150-200k less than what it would go for if it were not riddled with termites.

House is deceased estate and has been vacant for 8 years. Damage is moderate in most affected areas with severe yet easily accessible damage to some posts in contact with wet ground.

I am wondering what the deal would be with borrowing to finance this and whether its possible? Has anyone had any previous experience with this sort of thing?

The agent has left the word "termites" out of the contract but the pest inspection states they are clearly there. We would be hoping for a 80% loan and our existing loans are with Westpac and Commonwealth.

thanks in advance!

 

[DaveM]

I would expect that the valuer would pick up on it and mark it as a higher risk factor on the val which if you have LMI involved may cause issues.

If you are doing 80% then no LMI and a decent lender should be ok? Especially if you can get it as close to land value as you can.

 

[Aaron_C]

laurieload - it really depends on the lender. Most will not take this security, even at 80% LVR. Those that would, would only lend max 80% on the value of the land (according to valuer report). Best to go for a lender that has a no-val policy instead. A valuer would definitely pick up on it.

 

[Shahin_Afarin]

Depends on whether the valuer picks up on it or how obviously it is. You could go with a lender that has a no val policy (recommended) however if for whatever reason you cannot go with this lender then you could provide a building quote to fix the terminate damage.

 

[Jamie M]

Hiya

If a valuer inspects the property - they'll mention it in their report and might outline how much they think it will cost to repair.

If you can show that you have the funds available to you for these repairs - then it might be ok.

Alternatively - if the lender to go off a dekstop valuation (which WBC do quite a bit for 80% metro lends) then a valuer won't step into the property.

However, there's usually some condition in the loan offer docs where you declare that there's nothing wrong with the property....

Cheers

Jamie

 

[laurieload]

Thanks for all the replies people, very very useful and muchly appreciated

 

[Rolf Latham]

no val plicy is a good fit, but dont come to me with it : )

Lack of disclosure of material information to the lender wouldnt go down well if push came to shove and the loan went bad

ta
rolf

 

[Scott No Mates]

Are you buying to demolish? Otherwise, it is a massive unknown as to the repair costs & your risk exposure will be quite high.

 

[laurieload]

no val plicy is a good fit, but dont come to me with it : )

Lack of disclosure of material information to the lender wouldnt go down well if push came to shove and the loan went bad

ta
rolf

LOL Rolf!

So for future reference, if a house has got termites, or god awful foundations, or some other horrendous problem, how do people get finance if disclosure is a problem on even a no val? I seem to remember Nathan saying he buys his burnt out shells with 20% cash deposit. Wouldn't disclosure be a similar problem in that case?

 

[Rolf Latham]

LOL Rolf!

So for future reference, if a house has got termites, or god awful foundations, or some other horrendous problem, how do people get finance if disclosure is a problem on even a no val?

Im not a legal practitioner, most would argue its the lenders' problem to verify that the security is acceptable to them.

I believe it would only become a problem if it became a problem, and I wouldnt want it in my practice.


ta
rolf

 

[Peter_Tersteeg]

LOL Rolf!

So for future reference, if a house has got termites, or god awful foundations, or some other horrendous problem, how do people get finance if disclosure is a problem on even a no val? I seem to remember Nathan saying he buys his burnt out shells with 20% cash deposit. Wouldn't disclosure be a similar problem in that case?

My understanding is that Nathan has a very close relationship with a specific individual with a particular lender. Let's just say that it may have more to do with the individual he's dealing with rather than the lenders policy.

 

[tobe]

alternatively finance could be secured with a mitigation strategy for the run down nature of the house. this might be just a matter of showing a track record (a la Nathan), or might be a fixed price building contract/reno to remedy contract and evidence of the funds available to complete.

 

[Nathan]

Just want to clarify, I only buy burnt out properties using cash, i.e., no loans.

 

[Rolf Latham]

Just want to clarify, I only buy burnt out properties using cash, i.e., no loans.

in brown paper bags : )

ta
rolf

 

[DaveM]

Just want to clarify, I only buy burnt out properties using cash, i.e., no loans.

Do you have one of those silver attache cases with a handcuff on it? That would be pretty cool.

 

[Nathan]

Nope via EFT