High LVR without savings

[bryn]

I'm looking to buy a house soon, that will be a PPOR for 12 months and then subdivided and the rear sold. Still deciding on if we'll keep the front or not.

Its worth roughly 800k. Income is 70k each (140k total), with 2 kids under 5.

Had some credit card debt which is now all paid off, but as a result of paying that off we don't really have any savings.

We have a 5% deposit gifted from family. I'm after a 25 year loan, interest only for 2 years then normal.

I was looking at ING direct or Aussie home loans, ING looks good because of the offset account and no fees for substitution of security (when subdivided) but the borrowing calculator on the ing site looks a little more conservative with the loan amount?

Any suggested lenders or strategies to deal with the lack of savings?

 

[Aaron_C]

Your major sticking point there is:
a) High LVR
b) Lack of (genuine) savings

ING will not be suitable if you can't show genuine savings. You'd have to run through this situation with a broker to determine which lender can/can't do this. Have you factored in the extra costs of stamp duty?

 

[bryn]

i have accounted for stamp duty. Any ideas for a good broker in syd?

 

[ww2_nut]

Perhaps get your parents to go guarantor?

 

[bryn]

prehaps- but they could only do so for assets as they don't have the income

 

[alexlee]

Do you have any experience subdividing property? What will it cost and how will you pay for these fees?

 

[Shahin_Afarin]

ING is one of the worst lenders for what you want to do.

Big issue for me is the genuine savings factor. How long ago did they gift it to you? If its was recent then you can go with a lender that has a no genuine savings policy for up to 95% LVR loans (but they are limited and a tad expensive) or you can ask for a delayed settlement. The problem I have with the first option is that you are paying LMI and LMI is not transferrable and when you pay LMI on a loan - you can always use this credit so its so so crucial to pick the "right" lender when you are in LMI territory.

Do you have any existing property so that you can access the equity as this would count towards GS.

 

[Shahin_Afarin]

Also as a side question - which council are you subdividing through?

 

[bryn]

i haven't got the 5% yet- it'll come when needed (I'm trying to get it early).

 

[Shahin_Afarin]

A couple of niche lenders like Homeloans Ltd will do 95% no GS subject to certain criteria such as the fact it needs to be owner occupied but upfront fees and rate is a tad higher than our mainstream guys.

Ideally you want the funds in your account ASAP and if possible ask for a delayed settlement. Concurrently ascertain a Conditional Approval subject to proof of GS.

 

[bryn]

Also as a side question - which council are you subdividing through?

rockdale council

 

[Aaron_C]

If you cannot show genuine savings then you'd have to go for a different product - or show genuine savings through other means like advance rental / loan payments etc.

 

[Shahin_Afarin]

One option I forgot to mention is rent - if you have been renting for 12 consecutive months then this would count as GS.

 

[bryn]

yes, $550 a week for several years now in rent- and significant cc repayments in the last year.

 

[Shahin_Afarin]

Bingo - that will count as GS with most lenders so now its about choosing the right lender.