Getting Finance for PPR with IP eating up Equity (Need High LVR)

[Whishy]

Hi guys,

Im urgently chasing finance for approx $600k however the equity/deposit is lacking.

Looking to fast track (As you do), what are my options in obtaining finance with a minimal amount of deposit/equity?

I have about $30k equity in one property, (Valued at $220, only $170 owing), however on another property the valuations came back at $290k with $287k owing)... A bit ridiculous considering I purchased this in 2009 for $310k which was then a 3bed 1 bath, and is now a dual occupancy 5bed 2 bath 2 kitchen... Anyways thats another story.

I have the No Equity property for sale at the moment, hoping to get it sold to free up equity to get moving..

We are desperately chasing $600k for a ppr for me, my partner and 4 kids.

My savings so far are at $20k.

Any ideas/Hints/Tips??

Cheers

 

[Redom]

Hi guys,

Im urgently chasing finance for approx $600k however the equity/deposit is lacking.

Looking to fast track (As you do), what are my options in obtaining finance with a minimal amount of deposit/equity?

I have about $30k equity in one property, (Valued at $220, only $170 owing), however on another property the valuations came back at $290k with $287k owing)... A bit ridiculous considering I purchased this in 2009 for $310k which was then a 3bed 1 bath, and is now a dual occupancy 5bed 2 bath 2 kitchen... Anyways thats another story.

I have the No Equity property for sale at the moment, hoping to get it sold to free up equity to get moving..

We are desperately chasing $600k for a ppr for me, my partner and 4 kids.

My savings so far are at $20k.

Any ideas/Hints/Tips??

Cheers

Perhaps look to get a few valuations done to your 09 property - may get some more juice out that way. Even a 20k valuation difference (which is not uncommon with different valuers) - would reduce your LMI on your next purchase.

Then seek a 95% loan + cap LMI loan for your new PPOR. With 50k available as a deposit, you're already there. You'll need $30k in deposit, $15k to close (Duties, etc). Not an easy loan to get, but do-able (Bankwest, Westpac, St George, CBA, ANZ if your existing etc).

Cheers,
Redom

 

[Corey Batt]

If the serviceability is there you may get this one through Bankwest or other full cap lenders IF you can also draw the ~28k available in IP 1. LMI at this level will be 20-28k, with many lenders restricting max capping available to 2% of purchase price.

This is based on a QLD purchase, which I've assumed from your location field for your account.

 

[Jamie_]

Any ideas/Hints/Tips??

Get a good broker.

 

[Whishy]

Thanks for the reply guys. That gives me hope.

I am on $140k and my partner is on $80k, serviceability is not so much an issue.

Reason for no savings is we have just finished renovating both IP's over the last 12-18months to which one would say based on both valuations probably wasnt the best investment.

Both previous loans are with Westpac.

I will take a look at your suggestions and go from there

Any further suggestions keep them coming.

Thanks again guys Great site this one.

 

[Redom]

Thanks for the reply guys. That gives me hope.

I am on $140k and my partner is on $80k, serviceability is not so much an issue.

Reason for no savings is we have just finished renovating both IP's over the last 12-18months to which one would say based on both valuations probably wasnt the best investment.

Both previous loans are with Westpac.

I will take a look at your suggestions and go from there

Any further suggestions keep them coming.

Thanks again guys Great site this one.

Did a valuer physically come and inspect your properties? For reno jobs, this is important and can make a big difference to result.

 

[Shahin_Afarin]

Westpac do modelled estimates via VMS system and some of these valuation often come back quite generously. Some of the brokers have access to upfront valuations with Westpac so its worth doing this.

Also did you pay LMI on the existing loans as you will have LMI credit up your sleeve?

I do not like choosing a lender that gives the the highest LVR (like Bankwest) but is a conservative lender longer term. All you are doing is potentially wasting huge LMI credits. Short term win yes but think longer term.

 

[D.T.]

How does a household on 200k+ have 20k savings? Perhaps theres some root cause stuff that can be looked at after this has all been sorted, which might propel you along quicker in the future.

 

[albanga]

I am not a broker but as Redom has pointed out I would be looking at another valuation but if that does not come back positive then just from spending countless hours on the finance forum, some suggestions I have heard are:

Please note I known none of these are ideal but just throwing out things I have heard from others. Also you have a very high combined salary and also assuming your expenses are not too much then you could concentrate on paying out the below very quickly.

Personal Guarantor Loan

Loans that come with credit cards that could be used to pay the outstanding amount.

Commercial loan from family friends.

 

[Whishy]

Did a valuer physically come and inspect your properties? For reno jobs, this is important and can make a big difference to result.

Yes they did.

They basically negated all the renovations on the 09 property as she was unsure whether it needed council approval or not. I was advised by council that anything within the limits of the existing property boundary does not require approval. So she took the conservative route, but whats to say the next valuer wont do the same?

I contacted Bankwest who can do a 95% lvr which could work. They also mentioned something about drawing funds solely from the property with the equity.. Is this possible?

 

[Whishy]

How does a household on 200k+ have 20k savings? Perhaps theres some root cause stuff that can be looked at after this has all been sorted, which might propel you along quicker in the future.

If you read closely, you would see that I had renovated 2 IPs within 12 months..

That was over $70k worth...

Also have 4 kids which im not sure you are aware of how much $$ they soak.

 

[Redom]

They basically negated all the renovations on the 09 property as she was unsure whether it needed council approval or not. I was advised by council that anything within the limits of the existing property boundary does not require approval. So she took the conservative route, but whats to say the next valuer wont do the same?

Order a couple upfronts - it cant hurt and we see significant valuation differences 15%+ quite often on pretty standard stock. Variations on reno jobs are quite common too. Note there may be LMI implications of switching lenders though.

Cheers,
Redom

 

[Redom]

I contacted Bankwest who can do a 95% lvr which could work. They also mentioned something about drawing funds solely from the property with the equity.. Is this possible?

If you've got ~30k in equity, to close on a 600k purchase, you'll only need around 50k total. You've got that. LMI will be through the roof (20k+), so you'll need it to be capitalised. As Corey said, this could be tricky, given most lenders limit LMI capitalisation to 2% of purchase price.

 

[Whishy]

Westpac do modelled estimates via VMS system and some of these valuation often come back quite generously. Some of the brokers have access to upfront valuations with Westpac so its worth doing this.

Also did you pay LMI on the existing loans as you will have LMI credit up your sleeve?

I do not like choosing a lender that gives the the highest LVR (like Bankwest) but is a conservative lender longer term. All you are doing is potentially wasting huge LMI credits. Short term win yes but think longer term.

Yes,

For my first property in 2009 I paid about 14k LMI iirc.

Initial Principal owing was $315k. Now at $287k

 

[Shahin_Afarin]

Ok then you have LMI credit to use. Also looks like you are paying the principle loan down - I would revert to interest only and accumulate within the offset.

Also definitely recommend doing the modelled estimate system valuations as most are coming back stronger than full valuations.